AGENDA ITEM #
STAFF REPORT
TO: Rancho Mirage Housing Authority Board DATE: December 21, 2023 Chair and Members
FROM: Marcus J. Aleman II, Housing Manager
SUBJECT: Approval of Disposition and Development Agreement with Blieu LLC Regarding Disposition of Housing Authority Property for Affordable Housing
SPECIFIC REQUEST OR RECOMMENDATION
That the Housing Authority adopt Resolution No. 23- HA-(Next-in-Order) and execute a disposition and development agreement with accompanying deeds for the purpose of establishing site control of Assessor’s Parcel Number 689- 180-012 for the development of affordable housing with Blieu LLC in accordance with the terms of the DDA subject to final review and approval of Executive Director and General Counsel.
JUSTIFICATION OR INFORMATION
BACKGROUND
In 2009 the City of Rancho Mirage Housing Authority acquired the former Rancho Palms Mobilehome Park located at 39360 Peterson Road directly from the former owner of the park with the intention of developing affordable housing. Its surrounding area is made up of the Desert Cove Drive neighborhood to the north, Butler Abrams Trail to the east, the Public Storage facility to the west and the Housing Authority owned affordable housing property, Santa Rosa Villas to the south.
In the City’s 6th cycle Housing Element this 12+/ - acre parcel is listed in Table 44 as Inventory Site D and is included in the Housing Element’s goals, policies, and programs.
The implementation of the goals, policies, and programs related to this site ar e intended to facilitate the development of affordable housing. In July of this year, the City Council approved Zoning Text Amendment (“ZTA”) 23- 0002 and General Plan Zoning Map Amendment 23 -0001 (“GPZMA”) changing the site’s zoning from Mobile Home Park (“MHP”) to High Density Residential (“R-H”) and applied an Affordable Housing Overlay, as required by the certified Housing Element. Following the Housing Element’s land use policy implementation on the site, the Housing Authority entered into an Exclusive Negotiating Agreement with Blieu Companies for the development of affordable housing.
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DATE: December 21, 2023 DDA – Blieu LLC APN 689-180-012 Page 2 of 2
JUSTIFICATION OR INFORMATION CONTINUED
AGENDA ITEM #
On November 21, 2023, the Housing Authority Board authorized staff and the general counsel to negotiate draft disposition and development agreements with accompanying deeds for the purpose of establishing site control for the development of affordable housing with The Pacific Companies, National CORE and USA Properties, and Blieu LLC.
Staff and general counsel began negotiating a draft disposition and development agreement with Blieu LLC. Both parties have collaboratively worked toward producing a draft DDA that is suitable to all involved and provides the best opportunity to achieve the development of up to 120 affordable housing units for veterans.
SPECIFIC REQUEST OR RECOMMENDATION
That the Housing Authority approve Resolution No. 23-HA-[Next in Order] and execute a disposition and development agreement with accompanying deeds for the purpose of establishing site control of Assessor’s Parcel Number 689- 180-012 for the development of affordable housing with Blieu LLC in accordance with the terms of the DDA subject to final review and approval of Executive Director and General Counsel.
ENVIRONMENTAL DETERMINATION
This subject request is exempt from environmental review pursuant to CEQA Guidelines Section 15312 (Surplus Government Property Sales) and 15061(b)(3), because (1) the proposed action is a sale of surplus government property, and (2) approval of the action does not have the potential for causing significant effect on the environment, and it can be seen with certainty there is no possibility that the activity in question may have a significant effect on the environment. Further, any subsequent actions subject to CEQA will be subject to future environmental review in accordance with CEQA and CEQA Guidelines.
ATTACHMENT(S)
1. Public Hearing Notice
2. Resolution
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ATTACHMENT 1
PUBLIC HEARING NOTICE
(SEE ATTACHED)
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Rancho Mirage Housing Authority
69-825 Highway 111
Rancho Mirage, CA 92270
Phone 760/328-2266
P U B L I C H E A R I N G N O T I C E
MEETING OF THE
RANCHO MIRAGE CITY COUNCIL
ACTING AS
THE HOUSING AUTHORITY BOARD
Thursday, December 21, 2023 – 1:00 p.m.
Disposition and Development Agreement- Blieu Companies
Request: Consideration of a Disposition and Development Agreement regarding disposition of Housing Authority property for affordable housing.
Location: Approximately 12.34 acres having Assessor Parcel Number 689-180-012, generally located north east of Highway 111 and Peterson Road, south of Desert Cove Ave, in Rancho Mirage, CA (the “Subject Property”).
NOTICE IS HEREBY GIVEN that a Public Hearing will be held before the City Council acting as the Housing Authority Board pursuant to California Health and Safety Code Section 34312.3 regarding a Disposition and Development Agreement (“DDA”) proposing to dispose of the Subject Property to Blieu Companies, subject to the terms and conditions of a DDA, including the development of affordable housing.
The action is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15312 (Surplus Government Property Sales) and 15061(b)(3), because (1) the proposed action is a sale of surplus government property, and (2) approval of the action does not have the potential for causing significant effect on the environment, and it can be seen with certainty there is no possibility that the activity in question may have a significant effect on the environment. Further, any subsequ ent actions subject to CEQA will be subject to future environmental review in accordance with CEQA and CEQA Guidelines.
The Public Hearing will be held on Thursday, December 21, 202 3, at 1:00 p.m., in the Council Chamber, 69- 825 Highway 111, Rancho Mirage, California, at which time and place pertinent testimony will be heard. The file, including all environmental information, is available for public inspection at City Hall, Monday through Friday, between 8 a.m. and 5:00 p.m.
Written testimony may be submitted to the Housing Authority Board Secretary via email to [email protected], or mailed to Rancho Mirage Housing Authority 20-4
~ CITY OF RANCHO MIRAGE
Disposition and Development Agreement- Blieu Companies December 21, 2023
Board, ATTN: Housing Authority Board Secretary, 69-825 Highway 111, Rancho Mirage, CA 92270. Written testimony must be received no later than 10:00 a.m. on the day of the meeting to be considered by the City Council.
GOVERNMENT CODE § 65009 NOTICE: If you challenge this proposed activity in court, you may be limited to raising only those issues you or someone else raised at the Public Hearing described in this notice, or in written correspondence delivered to the City Council sufficiently prior to the Public Hearing to enable its consideration by them.
V
ICINITY MAP – NOT TO SCALE
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DESERT COVE DR
ATTACHMENT 2
RESOLUTION
(SEE ATTACHED)
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1 RESOLUTION NO. 2023-HA-____
A RESOLUTION OF THE RANCHO MIRAGE CITY COUNCIL ACTING AS THE HO
USING AUTHORITY BOARD APPROVING THE DISPOSITION AND
DEVELOPMENT AGREEMENT WITH BLIEU LLC AND FINDING THE ACTION
EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT
W HEREAS , on or about October 5, 2023, the C ity and Blieu Companies LLC entered into that certain Exclusive Negotiations Agreement ( “ENA”), whereby the Developer, as defined herein, was offered the opportunity to exclus ively negotiate with the Housing Authority for the purchase or lease of the Subject Property for development of an affordable housing project; and
WHEREAS, on November 21, 2023, the City Council acting as the Housing Authority Board, in relevant part, directed staff and its general counsel to negotiate draft disposition and development agreement for the development of affordable housing with Blieu Companies prior to January 1, 2024 , to help ensure the development of affordable housing on the Subject Property; and
WHEREAS, in accordance with California Health and Safety Code Section 34312.3, the Rancho Mirage Housing Authority (the “Housing Authority”) desires to sell the “Subject Pro perty” to Developer , subject to the terms and conditions of the Disposition and Development Agreement (the “ DDA”), attached hereto and incorporated herein by this ref erence, with sale proceeds to be used to assist housing for units for persons of low income; and
WHEREAS, the transfer of the Subject Property is for the common benefit and serves a public purpose in that it provides residents of the City affordable housing to address California’s affordable housing supply crisis, provides for public improvements, creates temporary construction jobs for workers in connection with the affordable housing project, creates full -time permanent jobs, and helps to satisfy the City’s Regional Housing Needs Allocation, as set forth in the City’s Housing Element that was duly certified by the California Department of Housing and Community Development for the 2021-2029 Planning period, which consisted of 430 Very Low units, 318 Low units, and 328 Moderate units; and
WHEREAS, public hearing notice of the Housing Authority’s consideration of the DDA was published twice in the Desert Sun, on December 6, 2023, and December 13, 2023; and
WHEREAS, in accordance with Health and Safety Code Section 34312.3 , the Housing Authority held a public hearing prior to the disposition of the Subject Property.
NOW, THEREFORE, THE RANCHO MIRAGE HOUSING AUTHORITY, DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS:
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2 SECTION 1. RECITALS AND INCORPORATION BY REFERENCE
The recitals set forth above are true and correct and any and all documents referenced herein are hereby incorporated herein by this reference.
SECTION 2. APPROVE DISPOSITION AND DEVELOPMENT
AGREEMENT
T
he Housing Authority hereby approves the Disposition and Development Agreement with Blieu LLC, dated November 21, 2023 (the “ DDA”), thereby approving the disposition of Housing Authority owned proper ty (the “Subject Property ”), as described in more deta il in the DDA , subject to the terms and conditions set forth therein, including but not limited to, the construction of an affordable housing project on said property to income-eligible families with a Military Veteran as head of household.
SECTION 3
. ENVIRONMENTAL REVIEW
The Housing Authority finds this action exempt from California Environmental Quality Act, C alifornia Public Resources Code §21000- §21177, as amended ("CEQA"), including CEQA Guidelines S ection 15312 (Surplus Government Property Sales), and 15061(b)(3), because (1) the proposed action is a sale of surplus government property, and ( 2) approval of the action does not have the potential for causing significant effect on the environment, and it can be seen with certainty there is no possibility that the activity in question may have a significant effect on the environment. Further, any subsequent actions subject to CEQA will be subject to future environmental review in accordance with CEQA and CEQA Guidelines.
SECTION 4. GENERAL PLAN CONSISTENCY
The Housing Authority finds that the dis position is consistent with the City ’s General Plan.
SE
CTION 5. SEVERABILITY.
That the Housing A uthority declares that, should any provision, section, paragraph, sentence or word of this Resolution be rendered or declared invalid by any final court action in a court of competent jurisdiction or by reason of any preemptive legislation, the remaining provisions, sections, paragraphs, sentences or words of this Resolution as hereby adopted shall remain in full force and effect.
SECTION
6. REPEAL OF CONFLICTING PROVISIONS.
That all the provisions her etofore adopted by the Housing Author ity that are in conflict with the provisions of this Resolution are hereby repealed.
SECTION
7 . EFFECTIVE DATE.
That this Resolution shall take effect immediately upon its adoption. 20-8
3 SEC TION 8. CERTIFICATION.
That the Housing Authority Secretary shall certify to the passage and adoption of this Resolution and enter it into the book of original resolutions.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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4 PASSED, APPROVED AND ADOPTED this 21
st day of December, 2023.
RANCHO MIRAGE HOUSING AUTHORITY
_________________________________
Steve Downs, Board Chair
ATTEST:
____________________________________
Kristie Ramos, Secretary
APPROVED AS TO FORM:
____________________________________
Colin Kirkpatrick, General Counsel
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5 EXHIBIT “A
”
DISPOSITION AND DEVELOPMENT AGREEMENT
(SEE ATTACHED)
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DISPOSITION
AND DEVELOPMENT AGREEMENT
between
THE RANCHO MIRAGE HOUSING AUTHORITY
and
BLIEU LLC
A CALIFORNIA LIMITED LIABILITY COMPANY
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65318.50016\34700316.2
TABLE OF CONTENTS
Page
i
ARTICLE I. DEFINITIONS; REPRESENTATIONS AND WARRANTIES; EFFECTIVE DATE.............................................................................................. 1
1.1 Definitions. ................................................................................................. 1
1.2 City Representations and Warranties. .................................................. 12 ARTICLE II. PROPERTY DISPOSITION ............................................................................. 14
2.1 Purchase and Sale. .................................................................................. 14
2.2 Payment of Purchase Price. ................................................................... 15
2.3 Eminent Domain . .................................................................................... 15
2.4 Title Approval. ........................................................................................ 15
2.5 Developer Investigations. ....................................................................... 16
2.6 Developer to Obtain all Project Entitlements. ..................................... 18
2.7 Delivery of Property Free of Occupants. .............................................. 20
2.8 Project Marketing Plan. ......................................................................... 20 ARTICLE III. ESCROW INSTRUCTIONS ........................................................................... 20
3.1 Opening of Escrow. ................................................................................. 20
3.2 Conditions to Close of Escrow. .............................................................. 21
3.3 Developer’s Escrow Deposits. ................................................................ 23
3.4 Authority’s Escrow Deposits. ................................................................. 24
3.5 Closing Procedure. .................................................................................. 25
3.6 Close of Escrow. ...................................................................................... 25
3.7 Recordation and Distribution of Documents. ....................................... 26
3.8 Escrow Closing Costs, Taxes and Title Policy Premium. .................. 267
3.9 Escrow Cancellation Charges. ............................................................... 26
3.10 Escrow Cancellation. .............................................................................. 26
3.11 Report to IRS........................................................................................... 27 ARTICLE IV. PROJECT DEVELOPMENT .......................................................................... 27
4.1 Developer Covenant to Undertake Project. .......................................... 27
4.2 Construction Contract; Construction Schedule .................................. 27
4.3 Construction Start and Completion of Project. ................................... 27
4.4 Compliance with Laws. .......................................................................... 28
4.5 Schedule of Performance. ....................................................................... 28
4.6 Developer Attendance at City Board Meetings. ................................... 29
4.7 City’s Right to Inspect Project and Property. ...................................... 29
4.8 Cost of Construction. .............................................................................. 30
4.9 Prevailing Wages . .................................................................................... 30
4.10 Efforts to Hire Local Workers ............................................................... 31
4.11 Certificate of Completion. ...................................................................... 31
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ii
ARTICLE V. DEVELOPER COVENANTS ........................................................................... 31
5.1 Obligation to Refrain from Discrimination. ......................................... 31
5.2 Form of Non-Discrimination and Non-Segregation Clauses. ............. 32
5.3 Environmental Indemnity of the City by the Developer. .................... 33
5.4 Insurance. ................................................................................................ 34 ARTICLE VI. PROJECT FINANCING .................................................................................. 37
6.1 Project Financing. ................................................................................... 37
6.2 Project Loan by City to Developer ....................................................... 39
6.3 Project Budget. ........................................................................................ 38
6.4 Only Permitted Exceptions. ................................................................... 39
6.5 City Right to Discharge Prohibited Encumbrances. ........................... 39
6.6 Rights of Lender and City Regarding Permitted Security Instruments. ............................................................................................. 39 ARTICLE VII. DEFAULTS, REMEDIES AND TERMINATION ...................................... 41
7.1 Defaults - General. .................................................................................. 41
7.2 Developer's Election re: Specific Enforcement of Agreement or Waiver of Right to Specific Performance and Limitation on Recovery of Deamages Prior to Close of Escrow. ................................ 42
7.3 Legal Actions. .......................................................................................... 44
7.4 Rights and Remedies are Cumulative. .................................................. 46
7.5 Developer Indemnification of the City. ................................................. 46 ARTICLE VIII. GENERAL PROVISIONS. ........................................................................... 47
8.1 Incorporation of Recitals. ....................................................................... 47
8.2 Restrictions on Transfers. ...................................................................... 47
8.3 Notices, Demands and Communications Between the Parties. ........... 48
8.4 Conflict of Interest. ................................................................................. 49
8.5 Warranty Against Payment of Consideration for Agreement. ........... 49
8.6 Non-liability of City, Officials and Employees. .................................... 49
8.7 Unavoidable Delay; Extension of Time of Performance. .................... 50
8.8 Inspection of Books and Records. ......................................................... 50
8.9 Real Estate Commissions. ...................................................................... 50
8.10 Binding on Successors and Assigns. ...................................................... 51
8.11 Entire Agreement. ................................................................................... 51
8.12 Execution of this Agreement. ................................................................. 51
8.13 Survival of Indemnity Obligations. ....................................................... 51
8.14 Time Declared to be of the Essence. ...................................................... 51
8.15 Approvals . ................................................................................................ 51
8.16 Further Assurances. ................................................................................ 51
8.17 City Approvals and Actions. .................................................................. 52
8.18 Investor Limited Partner Provisions. .................................................... 52 20-14
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Exhibit A Legal Description
Exhibit B Scope of Development
Exhibit C Schedule of Performance
Exhibit D Form of Quitclaim Deed
Exhibit E Form of Notice of Agreement
Exhibit F Form of Official Action of Developer
Exhibit G Form of Certificate of Completion
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Page
This AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (“Agreement”) is dated as of December 21, 2023 (“Date of Agreement”), for reference purposes only, and is entered into by and between the RANCHO MIRAGE HOUSING AUTHORITY, a public body located in the County of Riverside, State of California (“Housing Authority”), and BLIEU LLC, a California limited liability company (“Developer”). The Housing Authority and the Developer are sometimes referred to in this Agreement, each individually, as a “ Party,” or collectively, as the “Parties.”
RECITALS
This Agreement is entered into with reference to the following recitals of fact (“Recitals”) that City and Developer believe to be true as of the Effective Date of this Agreement:
A. T he Housing Authority is the owner of that certain real property located at [INSERT[ , Rancho Mirage, CA, approximately 12.34 acres in size, more specifically described in Exhibit A attached hereto and incorporated herein by this reference (“Property”).
B. O n or about October 5, 2023, the Housing Authority and Developer entered into that certain Exclusive Negotiations Agreement (the “ENA”) , providing Developer the opportunity to exclusively negotiate with the Housing Authority for the purchase or lease of the Property and development of a multi-family affordable housing development, consistent with the City of Rancho Mirage General Plan, that will include up to 120 family affordable housing units, consisting of a mix of affordable units, including very l ow-, low- and moderate- income affordable housing units (with priority provided to a specified number units as determined by the Housing Authority to income- eligible families with a Military Veteran as head of household (the “Project”) with the associated parking and site improvements . By entering into this Agreement, the Parties understand and agree the ENA is hereby terminated pursuant to Section 2.C. of the ENA.
C. The Housing Authority intends to transfer to the Developer: (1) the fee interest in the Property subject to the terms and conditions of this Agreement and the Regulatory Agreement. 20-16
1 D. Developer intends to finance the costs of the Project with sources that may include but are not limited to the Federal low-income housing tax credits, tax- exempt bonds, California state tax credits, and financing from the California Department of Housing and Community Development as appropriate, which will be reflected in the Financing Plan.
E. The Housing Authority has determined that Developer has the necessary expertise, skill and ability to carry out the commitments set forth in this Agreement and that this Agreement is in the best interests, and will materially contribute to the Housing Authority's economic development goals by: (1) creating temporary construction jobs for workers in connection with the construction of the Improvements; (2) creating full -time permanent jobs; (3) developing and continually operating an affordable housing development, providing affordable housing to City residents; and (4) satisfying City’s Regional Housing Needs Allocation, as set forth in the City’s Housing Element that was duly certified by the California Department of Housing and Community Development for the 2021- 2029 Planning period, which consisted of 430 Very Low units, 318 Low units, and 328 Moderate units.
F. The Housing Authority finds and determines that the sale of the Property is exempt from California Environmental Quality Act, California Public Resources Code §21000- §21177, as amended ("CEQA"), including CEQA Guidelines Section 15312 (Surplus Government Property Sales), and 15061(b)(3), because (1) the proposed action is a sale of surplus government property, (2) and (3) approval of the action does not have the potential for causing significant effect on the environment, and it can be seen with certainty there is no possibility that the activity in question may have a significant effect on the environment.
Further, any subsequent actions subject to CEQA will be subject to future environmental review in accordance with CEQA and CEQA Guidelines.
NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated herein by this reference, the mutual promises set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which is acknowledged by Housing Authority and Developer, the Parties agree as follows:
TERMS AND CONDITIONS
DEFINITIONS; REPRESENTATIONS AND WARRANTIES;
EFFECTIVE DATE
I.1 Definitions. All initially capitalized terms in this Agreement, including in the Recitals above, that are not otherwise defined in this Agreement shall have the following meanings:
I.1.1 “Additional Insureds ”
has the meaning ascribed to such term in
Section V.4.
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ARTICLE I.
2 I.1.2 “Affiliate” means and refers to any person or entity, directly or indirectly Controlling or Controlled by or under common Control with the applicable person or entity, whether by direct or indirect ownership of equity interests, by contract or otherwise.
I.1.3 “Agreement” means this Affordable Housing Disposition and Development Agreement.
I.1.4 “Housing Authority ” means the Rancho Mirage Housing Authority, a California public body.
I.1.5 “Housing Authority’s Title Notice Response” means the written response of the Housing Authority to the Developer’s Title Notice, in which the Housing Authority either (a) elects to cause the removal from the Preliminary Report of any matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that were objected to in the Developer’s Title Notice, or (b) elects not to cause the removal of such objected- to items.
I.1.6 “CE QA” means the California Environmental Quality Act, Public Resources Code Sections 21000, et seq.
I.1.7 “Certificate of Completion ” means the written certification of Housing Authority that the construction of the Project has been completed in compliance with the terms and conditions of this Agreement, substantially in the form of Exhibit G attached to this Agreement.
I.1.8 “C ity” means the City of Rancho Mirage, a charter city and recognized for certain purposes as a political subdivision of the State of California.
I.1.9 “Housing Authority Requirements” has the meaning ascribed to the term in Section 2.6.2.
I.1.10 “Close of Escrow” or “Closing” means the recording of the Quitclaim Deed for the Property in the official records of the Recorder of the County, and completion of each of the actions set forth in ARTICLE III by the Escrow Holder for the Housing Authority to sell the Property to the Developer and the Developer to purchase the Property from the Housing Authority.
I.1.11 “Completion of Construction” when used in this Agreement means, unless otherwise indicated, the issuance of a Certificate of Completion confirming that the final certificate of occupancy for the Project, based on the plans submitted by the Developer to the Housing Authority, has been issued.
I.1.12 “Construction Financing” means one or more loans that Developer shall obtain from one or more Institutional Lenders, the proceeds of which are to be used and applied to pay the reasonable costs of obtaining such loan(s) and either: (a) pay Project Costs; or (b) pay the cost to refinance only the outstanding amount owed under a prior loan obtained by Developer to finance the amount described in subsection (a) of this Section 1.1.12 (without any other amounts).
Such loan(s) shall provide for normal and customary disbursement controls for the payment of 20-18
3 Project Costs and normal and customary fees and expenses for loan(s) of similar size and purpose.
The Construction Financing is set forth in the Project Budget.
I.1.13 “Construction Financing Documents” means the various documents and instruments made by and between Developer and one or more Institutional Lenders that evidence or perfect the Construction Financing or the security for repayment of the Construction Financing, including any associated Security Instrument.
I.1.14 “Construction Plans” means all construction documentation upon which Developer, and Developer’s several contractors, shall rely in building each and every part of the improvements and shall include, but not necessarily be limited to, final architectural drawings, landscaping plans and specifications, hydrology and drainage plans, final elevations, building plans and specifications (also known as “working drawings”) .
I.1.15 “Control” means and refers to possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether by ownership of equity interests, by contract or otherwise.
I.1.16 “Controlling” and “Controlled” mean and refer to exercising or having Control.
I.1.17 “County” means the County of Riverside, California.
I.1.18 “Developer” means Blieu LLC, a California limited liability company and its successors and assigns that are permitted by this Agreement.
I.1.19 “Developer’s Title Notice” means a written notice from the Developer to the Housing Authority indicating the Developer’s objection to specific matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy for the Property, describing in suitable detail the actions that the Developer reasonably beli eves are indicated to cure or correct each of the Developer’s objections.
I.1.20 “Due Diligence Investigations ” means the Developer’s due diligence investigations of the Property to determine the suitability of the Property for development and operation of the Project, including, without limitation, investigations of the environmental and geotechnical suitability of the Property, as deemed appropriate in the reasonable discretion of the Developer, all at the sole cost and expense of the Developer.
I.1.21 “Due Diligence Investigation Rejection Notice” means a written notice of the Developer delivered to the Housing Authority and the Escrow Holder prior to the end of the Due Diligence Period, indicating the Developer’s rejection of the condition of the Property and refusal to accept a conveyance of fee title to the Property, describing in reasonable detail the actions that the Developer reasonably believes are indicated to allow the Developer to accept the condition of the Property.
I.1.22 “Due Diligence Period” means the date commencing on the Effective Date and ending at 5:00 p.m. on the 120
th day following the Effective Date.
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I
4 I.1.23 “Effective Date” has the meaning ascribed to the term in Section I.2.2.
I.1.24 “Environmental Claims” has the meaning ascribed to the term in Section V.3.
I.1.25 “Environmental Laws” means all federal, state, local, or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or requirements of any government authority regulating, relating to, or imposing liability of standards of conduct concerning any hazardous substance (as later defined), or pertaining to occupational health or industrial hygiene (and only to the extent that the occupational health or industrial hygiene laws, ordinances, or regulations relate to Hazardous Substances on, under, or about the Property), occupational or environmental conditions on, under, or about the Property, as now or may at any later time be in effect, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) [42 USC Section 9601 et seq.]; the Resource Conservation and Recovery Act of 1976 (“RCRA”) [42 USC Section 6901 et seq.]; the Clean Water Act, also known as the Federal Water Pollution Control Act (“FWPCA”) [33 USC Section 1251 et seq.]; the Toxic Substances Control Act (“TSCA”) [15 USC Section 2601 et seq.]; the Hazardous Materials Transportation Act (“HMTA”) [49 USC Section 1801 et seq.]; the Insecticide, Fungicide, Rodenticide Act [7 USC Section 6901 et seq.] the Clean Air Act [42 USC Section 7401 et seq.]; the Safe Drinking Water Act [42 USC Section 300f et seq.]; the Solid Waste Disposal Act [42 USC Section 6901 et seq.]; the Surface Mining Control and Reclamation Act [30 USC Section 101 et seq.] the Emergency Planning and Community Right to Know Act [42 USC Section 11001 et seq.]; the Occupational Safety and Health Act [29 USC Section 655 and 657]; the California Underground Storage of Hazardous Substances Act [California Health & Safety Code Section 25288 et seq.]; the California Hazardous Substances A ccount Act [California Health & Safety Code Section 25300 et seq.]; the California Safe Drinking Water and Toxic Enforcement Act [California Health & Safety Code Section 24249.5 et seq.] the Porter-Cologne Water Quality Act [California Water Code Section 13000 et seq.] together with any amendments of or regulations promulgated under the statutes cited above and any other federal, state, or local law, statute, ordinance, or regulation now in effect or later enacted that pertains to occupational health or industrial hygiene, and only to the extent the occupational health or industrial hygiene laws, ordinances, or regulations relate to Hazardous Substances on, under, or about the Property, or the regulation or protection of the environment, including ambient air, soil, soil vapor, groundwater, surface water, or land use.
I.1.26 “Environmental Matters”
has the meaning ascribed to the term in Section
V.3.
I.1.27 “Escrow” has the meaning ascribed to the term in Section II.1.
I.1.28 “Escrow Closing Date ” means, subject to extension due to Unavoidable Delay, on or before the 5th business day following the Escrow Holder’s receipt of written confirmation from both Housing Authority and Developer of the satisfaction or waiver of all conditions precedent to the Close of Escrow.
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5 I.1.29 “Escrow Holder” means _________, Attn: ___________ through its office located at _____________________________________, or such other escrow holder mutually agreed upon in writing by both Housing Authority and Developer.
I.1.30 “Escrow Opening Date” has the meaning ascribed to the term in Section III.1.
I.1.31 “Event of Default” has the meaning ascribed to the term in Section VII.1.
I.1.32 “Housing Authority Executive Director” means the Executive Director of the Rancho Mirage Housing Authority or his or her designee or successor in function.
I.1.33 “FIRPTA Affidavit” means an affidavit complying with Section 1445 of the United States Internal Revenue Code.
I.1.34 “Governmental Agency” or “Governmental Agencies” means any and all courts, boards, agencies, commissions, offices, or authorities of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, City, or otherwise) whether now or later in existence.
I.1.35 “Governmental Requirements ” means all codes, statutes, ordinances, laws, permits, orders, and any rules and regulations promulgated thereunder of any Governmental Agency.
I.1.36 “H
azardous Substances ” means, without implied limitation, substances defined as “hazardous substances,” “hazardous material,” “toxic substance,” “solid waste,” or “pollutant or contaminate” in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601, et seq.; the TSCA; the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq.; those substances listed in the United States Department of Transportation (DOT) Table [49 CFR 172.101], or by the EPA, or any successor authority, as hazardous substances [40 CFR Part 302]; and those substances defined as “hazardous waste” in Section 25117 of the California Health and Safety Code or, as “hazardous substances” in Section 25316 of the California Health and Safety Code; other substances, materials, and wastes that are, or become, regulated or classified as hazardous or toxic under federal, state, or local laws or regulations and in the regulations adopted pursuant to said laws, and shall also include asbestos, polychlorinated biphenyl, flammable explosives, radioactive material, petroleum products, and substances designated as a hazardous substance pursuant to 33 USC Section 1321 or listed pursuant to 33 USC Section 1317. Notwithstanding the foregoing, “Hazardous Substances” shall not include such products in quantities as are customarily used in the construction, maintenance, development or management of residential developments or associated buildings and grounds, or typically used in residential activities in a manner generally used in other comparable residential developments, or substances commonly ingested by a significant population living within the Project including, without limitation, alcohol, aspirin, tobacco and saccharine.
I.1.37 “I
ndemnified Parties ” means Housing Authority and its commissions, agents, attorneys, officers, employees, and authorized representatives. 20-21
6 I.1.38 “Institutional Lender ” means any of the following: (a) a bank (State, Federal or foreign), trust company (in its individual or trust capacity), insurance company, credit union, savings bank (State or Federal), pension, welfare or retirement fund or system, real estate investment trust (or an umbrella partnership or other entity of which a real estate investment trust is the majority owner), Federal or State agency regularly making or guaranteeing mortgage loans, investment bank or a subsidiary of a Fortune 500 company; or (b) any person or entity that is an Affiliate of or is a combination of any one or more of the persons or entities described in subparagraph (a) of this Section ; or (c) a joint powers authority the membership of which is composed of Governmental Agencies; or (d) a Governmental Agency acceptable to the Housing Authority.
I.1.39 “Lender” means the holder of any debt, obligation and Security Instrument and its successors and assigns.
I.1.40 “N
otice of Agreement ” means the notice in the form of Exhibit E to this Agreement to be recorded against the Property at the Close of Escrow to provide constructive record notice of the existence and application of this Agreement to the Property.
I.1.41 “P
arties ” means, collectively, the Housing Authority and the Developer.
I.1.42 “Party” means, individually, the Housing Authority or the Developer, as applicable.
I.1.43 “PCO Statement ” means a preliminary change of ownership statement provided for in California Revenue and Taxation Code Section 480.3.
I.1.44 “Permanent Loan” means any loan that the Developer shall obtain from an Institutional Lender and Subordinate Loan Lender , the proceeds of which are to be used and applied solely to pay: ( a) the reasonable costs of obtaining such loan; ( b) the then current outstanding principal, interest, fees and charges under any Construction Financing; and ( c) any Project Costs then unpaid. A Subordinate Loan recorded at the Close of Escrow may become a Permanent Loan if, according to its terms, it is not to be paid in full when the Construction Financing is paid off. The Permanent Loans are set forth in the Project Budget.
I.1.45 “Permitted Exceptions” means (a) any and all items shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that the Developer accepts, pursuant to Section II.4; (b) any exceptions from coverage under the proposed Title Policy; ( c) non- delinquent property taxes and assessments; ( d) this Agreement; ( e) the Quitclaim Deed; ( f) the Notice of Agreement; ( g) the Regulatory Agreement; ( h) any Permitted Security Instrument; (k) any agreement restricting occupancy and rents of the Project required by an Institutional Lender or a Subordinate Loan Lender, if any; and ( i) any other document or encumbrance expressly required to be recorded against the Property or the Project pursuant to the terms of this Agreement.
I.1.46 “Permitted Security Instrument” means any Security Instrument that: (a) encumbers only the Property or any interest in the Property; (b) is held by a Lender that is an Institutional Lender or a Subordinate Loan Lender, subject to the jurisdiction of the courts of the State, not immune from suit and cannot elect to be immune from suit; and (c) only secures: (i) the 20-22
7 repayment of money used to pay or reimburse Project Costs; (ii) a bona fide Permanent Loan; (iii) a bona fide Subordinate Loan; (iv) a bona fide Refinancing; or (v) a delivery assurance fee regarding a Permanent Loan that is refundable to Developer at the close of the Permanent Loan. If the Housing Authority approves a loan structure for the Project where, in order to avoid triggering prevailing wages for the Project, a loan is made to Developer and then is immediately made by Developer to the Project, then a Security Instrument securing such a loan will be deemed a Permitted Security Instrument. Promptly after execution, Developer shall promptly deliver a copy of any Security Instrument to the Authority, with the Lender’s name and notice address.
I.1.47 “Permitted Transfer” means any of the following types of Transfer by Developer, which unless otherwise provided do not require the Housing Authority’s prior written approval and where, except for a Transfer described in subsections .1, .2, .3, .4, .6, .7 and .9 below, the person or entity to which such Transfer is made expressly and unconditionally assumes in a written assignment and assumption agreement between such person or entity, Developer and Housing Authority that is in a form reasonably acceptable to Housing Authority (as evidenced by execution of such assignment and assumption agr eement by the Housing Authority Executive Director), all obligations of Developer under this Agreement:
I.1.47.1 Any Transfer to an Institutional Lender or
Subordinate Loan Lender: (a) pursuant to a Permitted Security Instrument as collateral for bona fide Construction Financing to pay all or any part of the Project Costs; or (b) pursuant to a Permitted Security Instrument as collateral for a bona fide Permanent Loan or bona fide Refinancing.
I.1.47.2 Any Transfer directly resulting from the foreclosure or deed in lieu of foreclosure of a Permitted Security Instrument as permitted under Section 6.6.7.
I.1.47.3 Any Transfer of stock or equity in a Party that does not change management or operational Control of the Project, with no material change in beneficial ownership (with the exception of any conveyance to member(s) of the immediate family(ies) of the transferor(s) or trusts for their benefit), and which constitutes a tax-free transaction under Federal income tax law and California real estate transfer tax.
I.1.47.4 The lease of residential apartment units in the Project consistent with the Regulatory Agreement.
I.1.47.5 The Transfer of Developer’s interest in the Property or Developer’s interest hereunder to a limited partnership, the general partner of which is Developer, a nonprofit entity affiliated with Developer, or a limited liability company of which Developer or a nonprofit entity affiliated with Developer is the manager , which limited partnership has been formed to be an entity to receive capital contributions resulting from the syndication of Tax Credits.
I.1.47.6 The Transfer and sale of limited partnership interests in Developer while the Developer is in the form of a limited partnership. 20-23
I
8 I.1.47.7 In the event that any general partner of the Developer, while the Developer is in the form of a limited partnership, is removed by the limited partner of such limited partnership for cause following default under applicable provisions of the limited partnership agreement, the Transfer of the general partner interest to a 501(c)(3) tax exempt nonprofit corporation or its Affiliate selected by the limited partner and approved by the Housing Authority, which approval will not be unreasonably withheld, delayed or conditioned.
I.1.47.8 The Transfer of the Project from Developer, while the Developer is in the form of a limited partnership, to one or more of the general partners of the Developer or their Affiliates at the end of the tax credit compliance period for the Project and the grant of an option or right of first refusal to do so contained in or ancillary to the limited partnership agreement.
I.1.47.9 Any dilution of a general partner’s interest in the Developer while the Developer is in the form of a limited partnership, in accordance with the Developer’s limited partnership agreement; and
I.1.48 “Plans and Specifications” has the meaning ascribed to the term in Section II.6.1
I.1.49 “Preliminary Report ” means a preliminary report issued by the Title Company in contemplation of the issuance of the Title Policy, accompanied by legible copies of all documents listed in Schedule B of the report as exceptions to coverage under the proposed Title Policy. The Parties acknowledge that they may prepare one or more Preliminary Reports for each parcel, or group of parcels, comprising the Property. In such case, all reports, notices, and objection letters which pertain to the Preliminary Report for the entirety of the Property will apply separately to each Preliminary Report associated with a parcel or a group of parcels.
G. “Project” means the construction and development of the Property as an affordable multi-family rental housing development, including all required or associated on- site and off -site improvements, all hardscape and all landscaping, all as described generally in the Scope of Development, and all to be developed in accordance with the Plans and Specifications to be approved by the Housing Authority in its reasonable discretion and with any conditions imposed by the Housing Authority in its approval of the Plans and Specifications. The primary purposes of the Project shall be to provide multi -family affordable housing development. The development of the Project shall include the construction of up to 120 family affordable housing units, consisting of a mix of affordable units, including very low -, low - and moderate - income affordable housing units (with priority provided to a specified number units as determined by the Housing Authority to income -eligible families with a Military Veteran as head of household ”) with the associated parking and site improvements.
I.1.50 “Project Budget” means the Project Costs and anticipated sources of funds to pay the Project Costs as set forth in the Project proforma, which is subject to approval by the Housing Authority Executive Director, as may be modified from time to time pursuant to Section
6.3. 20-24
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9 I.1.51 “Project Commencement Date” means no later than the date 30 days after the Escrow Closing Date.
I.1.52 “Project Completion Date” means that date by which a Certificate of Completion must be issued for the Project, as more particularly provided in the Schedule of Performance. The Project Completion Date shall be no later than the earlier of the following (1) 36 months after both of the following: the Close of Escrow and the Project Commencement Date; or (2) February 2028.
I.1.53 “Project Costs ” means all of the costs of acquiring the Property and developing, constructing and equipping the Project.
I.1.54 “P
roperty ” means that real property, and all current and future improvements thereon (including, without implied limitation, the Project), legally described in Exhibit A.
I.1.55 “Property Transfer” means and refers to any “change in ownership,” as defined in Revenue and Taxation Code Sections 60, 61(a)- (i), 65(a) and 67, of all or any portion of the Property.
I.1.56 “Purchase Price” means the purchase price for the Property in the amount of one dollar ($1.00).
I.1.57 “Qualifying Units” will have the meaning ascribed thereto in the Regulatory Agreement.
I.1.58 “Qu itclaim Deed ” means a deed substantially in the form of Exhibit D to this Agreement, conveying Housing Authority’s interest in the Property to the Developer.
I.1.59 R ecord ”, “recorded”, “recording” or “recordation” each mean and refer to recordation of the referenced document in the official records of the Recorder of the County of Riverside, California.
I.1.60 Refinancing. Any loan secured by a Permitted Security Instrument that the Developer obtains from an Institutional Lender subsequent to recordation of the Permanent Loan for a loan amount which, when combined with the then balances of all Subordinate Loans encumbering the Property, does not exceed 90% of the appraised value of the Property plus the value of Tax Credits allocated to the Project by TCAC, with said values evidenced by an appraisal or other evidence acceptable to the Housing Authority.
I.1.61 “R
egulatory Agreement ” means the Declaration of Restrictive Covenants, Conditions and Restrictions Restricting the Use of Property for Affordable Housing in substantially the form of Exhibit H attached to this Agreement, which shall be recorded against the Pr operty at the Close of Escrow. The express terms of which are subject to the Housing Authority’s reasonable approval, consistent with the terms of this Agreement, and which will impose certain covenants and affordability restrictions in full force and effect for a term of 55 years following recordation of Certificate of Completion.
20-25
10 I.1.62
I.1.63 “Schedule of Performance” means the schedule of dates to complete p
erformance of certain critical actions by the Parties pursuant to this Agreement, attached to this Agreement as Exhibit C.
I.1.64 “Scope of Development ” means the detailed description of the Project attached to this Agreement as Exhibit B.
I.1.65 “Security Instrument ” means any security instrument, deed of trust, security deed, contract for deed, deed to secure debt, or other voluntary real property (including leasehold) security instrument(s) or agreement(s) intended to encumber the Property (including leasehold) to provide security for any obligation (including a purchase-money or other promissory note) arising from or relating to financing for the Project , as entered into, renewed, modified, consolidated, increased, decreased, amended, extended, restated, assigned (wholly or partially), collaterally assigned, or supplemented from time to time, unless and until paid, satisfied, and discharged of record. If two or more such security instruments are consolidated or restated as a single lien or held by the same Lender (as applicable), then all such security instruments so consolidated or restated shall constitute a single Security Instrument. A participation interest in a security instrument (or partial assignment of the secured loan) does not itself constitute a Security Instrument.
I.1.66 “Senior” means, referring to multiple Security Instruments, the Security Instrument that has the greatest priority in lien of the same type. Where Senior is used as a comparative term as against any specified Security Instrument, such term refers to any Security Instrument of the same type that is prior in interest to the other specified Security Instrument. If only one Security Instrument of a particular type exists, then it shall be deemed the Senior Security Instrument of such type.
I.1.67 “Senior Loan” has the meaning as set forth in Section 2.2.3.
I.1.68 “State” means the State of California.
I.1.69 “Subordinate Loan” means any loan shown in the Project Budget or through revisions to the Project Budget approved by the Housing Authority Executive Director pursuant to Section 6.2, and which is secured by a Permitted Security Instrument.
I.1.70 “Tax Credit Equity ” means the equity investment toward the cost of development and construction of the Project contributed to the Developer (when in the form of a limited partnership) by the Tax Credit Investor, in the amount set forth in the Project Budget.
I.1.71 “Tax Credit Investor” means the limited partner in Developer (when in the form of a limited partnership) that provides the Tax Credit Equity for the development and construction of the Project.
I.1.72 “Tax Credits” means an allocation from TCAC of 4% federal low income housing tax credits to finance a portion of the Project Costs, all in accordance with Section 42 of 20-26
I
11 the Internal Revenue Code of 1986, as amended, all associated Internal Revenue Service regulations and all associated TCAC regulations.
I.1.73 “TCAC” means the California Tax Credit Allocation Committee or successor in function.
I.1.74 “TCAC Regulatory Agreement” means the extended low income housing commitment within the meaning of Internal Revenue Code Section 42(h)(6)(B) in favor of TCAC, required by TCAC to be recorded against the Property in connection with the award of Tax Credits to the Project.
I.1.75 “Title Company” means First American Title Insurance Company, Attn:
Greg Franke, Title Officer, through its office located at 901 Via Piemonte, Suite 105, Ontario, CA 91764 , or such other title company mutually agreed upon in writing by both Housing Authority and Developer
I.1.76 “Title Policy” means an ALTA owner ’s standard coverage policy of title insurance issued by the Title Company, with coverage in the full amount of the _______ and insuring Developer’s fee title to the Property, subject only to the Permitted Exceptions. Developer shall pay for the Title Policy.
I.1.77 “Transfer” means any of the following:
I.1.77.1 Any assignment, conveyance, grant, hypothecation, mortgage, pledge, sale, or other transfer, whether direct or indirect, of all or any part of such property, right or obligation, or of any legal, beneficial, or equitable interest or estate in such property, right or obligation or any part of it (including the grant of any easement, or non-monetary lien or encumbrance); or
I.1.77.2 Any conversion, exchange, issuance, modification, reallocation, sale, or other transfer of any direct or indirect equity interest(s) in the owner of such property, right or obligation by the holders of such equity interest(s); or I.1.77.3 Any merger, consolidation, sale, or lease of all or substantially all of the assets of the Developer or a series of such sales, assignments and the like that, in the aggregate, result in a disposition of more than a 49% interest of all or substantially all of the assets of the Developer; or
I.1.77.4 Any Permitted Transfer; or Except for a Permitted Security Instrument, the recordation of any deed of trust, mortgage, lien or similar encumbrance against all or any portion of the Property or the Project.
I.1.78 “Unavoidable Delay” means any delay that is caused in all material respects by the other Party or that is beyond the control of the Housing Authority or the Developer, including delay caused by strikes, acts of God, pandemics, epidemics, declarations or proclamations of emergency by either the Housing Authority, the State, or the Federal government, weather, inability to obtain labor or materials, inability to obtain governmental permits or 20-27
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12 approvals, governmental restrictions, civil commotion, fire or similar causes, but excluding circumstances subject to Section VIII.7.1.
I.2 R epresentations and Warranties.
I.2.0 Housing Authority Representations and Warranties . The representations and warranties of Housing Authority contained in this Section 0 will be based upon the actual knowledge of the Housing Authority Executive Director as of the Effective Date. All representations and warranties contained in this Section 0 are true and correct as of the Effective Date. Housing Authority’s liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Closing. Housing Authority hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by Developer has been made in material reliance by Developer on such covenants, representations and warranties:
I.2.0.0 Housing Authority is a public body. Housing
Authority has the legal power, right and authority to enter into this Agreement, to execute the instruments and documents referenced herein, and to consummate the transactions contemplated hereby.
I.2.0.1 The persons executing any instruments for or on behalf of Housing Authority have been authorized to act on behalf of Housing Authority and this Agreement is valid and enforceable against Housing Authority in accordance with its terms and each instrument to be executed by Housing Authority pursuant hereto or in connection herewith shall, when executed, be valid and enforceable against Housing Authority in accordance with its terms. No approval, consent, order or authorization of, or designation or declaration of any other person, is required in connection with the valid execution and delivery of and compliance with this Agreement by Housing Authority.
I.2.0.2 Housing Authority has taken all requisite action and obtained all requisite consents for agreements or matters to which Housing Authority is a party in connection with entering into this Agreement and the instruments and documents referenced herein and in connection with the consummation of the transactions contemplated hereby.
I.2.0.3 On the Effective Date, the Property is composed of and contains a single legally formed parcels containing a total of approximately 12.34 acres.
I.2.0.4 Housing Authority is the owner of the entire right, title and interest in and to the Property.
I.2.0.5 There are no pending or, to the best of Housing Authority’s knowledge, threatened claims, allegations or lawsuits of any kind that could materially and adversely affect the value of the Property or prohibit the sale thereof, nor to the best of Housing Authority’s knowledge, is there any governmental investigation of 20-28
13 any type or nature pending or threatened against or relating to the Property or the transactions contemplated hereby.
I.2.0.6 To the best of Housing Authority’s actual knowledge, and without independent investigation having been made by Housing Authority, the Housing Authority has received no written notice of any Hazardous Materials located on, under, or about the Property.
I.2.0.7 If the Housing Authority becomes aware of any act or circumstance that would change or render incorrect, in whole or in part, any representation or warranty made by the Housing Authority under this Agreement, whether as of the date given or any time thereafter, whether or not such representation or warranty was based upon the Housing Authority’s knowledge and/or belief as of a certain date, the Housing Authority will give written notice of such changed fact or circumstance to the Developer.
I.2.1 D
eveloper Representations and Warranties . The representations and warranties of Developer contained in this Section I.2.1 s hall be based upon the actual knowledge of Mark Bigley, Vice President of Developer, as of the Effective Date. All representations and warranties contained in this Section I.2.1 are true and correct as of the Effective Date. The Developer’s liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Closing. The Developer hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by Housing Authority has been made in material reliance by Housing Authority on such covenants, representations and warranties:
I.2.1.1 The Developer is a California limited liability company, lawfully entitled to do business in the State of California. The Developer has the legal right, power and authority to enter into this Agreement and the instruments and documents referenced herein and to consummate the transactions contemplated hereby.
The person(s) executing this Agreement and the instruments referenced herein on behalf of the Developer hereby represent and warrant that such person(s) have the power, right and authority to bind the Developer.
I.2.1.2 The Developer has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required for the Developer’s authorization to enter into Agreement.
I.2.1.3 Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby wi ll result in a breach of or constitute a default under any other agreement, document, instrument or other obligation to which the Developer is a party or by which the Developer may be bound, or under law, statute, ordinance, rule, governmental regulation or any writ, injunction, order or decree of any court or governmental body applicable to the Developer or to the Property. 20-29
14 I.2.1.4 This Agreement is, and all agreements, instruments and documents to be executed by the Developer pursuant to this Agreement wi ll be duly executed by and will be valid and legally binding upon the Developer and enforceable in accordance with their respective terms, subject only to applicable bankruptcy, insolvency, reorganization, or similar laws or equitable principles affecting or limiting the rights of contracting parties generally . No approval, consent, order or authorization of, or designation or declaration of any other person, is required in connection with the valid execution and delivery of in compliance with this Agreement by the Developer.
I.2.1.5 If the Developer becomes aware of any act or
circumstance that would change or render incorrect, in whole or in part, any representation or warranty made by the Developer under this Agreement, whether as of the date given or any time thereafter, whether or not such representation or warranty was based upon the Developer’s knowledge and/or belief as of a certain date, the Developer must give immediate written notice of such changed fact or circumstance to the Housing Authority.
I.2.2 Effective Date. T
his Agreement is dated December 21, 2023, for reference purposes only. This Agreement shall not become effective until the date on which all of the following are true (“Effective Date”) and no later than December 29, 2023: (a) this Agreement is approved and executed by the appropriate authorities of Developer and delivered to Housing Authority; (b) Developer has delivered to Housing Authority a certified copy of the official action taken by all of the entities comprising the Developer approving this Agreement, substantially in the form attached to this Agreement as Exhibit F; (c) following all legally required notices and hearings, this Agreement is approved by the Housing Authority Board; and (d) this Agreement is executed by the authorized representatives of Housing Authority.
I.2.3 Exhibit List . T he following is a list of the Exhibits attached to this Agreement. Each of the Exhibits is incorporated by this reference into the text of this Agreement.
Exhibit A Lega l Description of Property
Exhibit B Scope of Development
Exhibit C Schedule of Performance
Exhibit D Form of Quitclaim Deed
Exhibit E Form of Notice of Agreement
Exhibit F Form of Official Action of Developer
Exhibit G Form of Certificate of Completion
Exhibit H Form of Regulatory Agreement
PROPERTY DISPOSITION
II.1 Purchase and Sale. In exchange for Developer’s payment of the Purchase Price and performance of Developer’s other covenants and undertakings set forth in this Agreement, the Housing Authority shall sell the Property to the Developer and the Developer shall purchase the Property from the Housing Authority pursuant to the terms and conditions of this Agreement.
For the purposes of exchanging funds and documents to complete the sale from the Housing Authority to the Developer and the purchase by the Developer from the Housing Authority of the 20-30
ARTICLE II.
15 Property pursuant to the terms of this Agreement, the Housing Authority and the Developer agree to open an escrow (“Escrow”) with the Escrow Holder. ARTICLE III of this Agreement constitutes the joint escrow instructions of the Parties to the Escrow Holder for completion of the Escrow for the sale of the Property, as contemplated by this Agreement. The Developer and the Housing Authority shall execute such further escrow instructions, consistent with the provisions of this Agreement, as may be reasonably requested by the Escrow Holder. In the event of any conflict between the provisions of this Agreement and any other escrow instructions requested by the Escrow Holder, as between the Housing Authority and the Developer, the provisions of this Agreement shall control.
II.2 P
ayment of Purchase Price
2.2.1 Note and Deed of Trust . The Developer shall pay the Purchase Price by depositing it at least 1 business day preceding the Escrow Closing Date.
II.3 Eminent Domain.
If any portion of the Property or any interest in any portion of the Property, becomes the subject of any eminent domain proceeding prior to Close of Escrow, other than such a proceeding by the Housing Authority or City, including the filing of any notice of intended condemnation or proceedings in the nature of eminent domain commenced by any Governmental Agency, the Housing Authority will immediately give the Developer notice of such occurrence, and the Developer will have the option, exercisable within 10 business days after receipt of such notice from the Housing Authority, to either: (a) cancel the Escrow and terminate this Agreement and the Escrow, in which case the Parties and the Escrow Holder shall proceed in accordance with Section
3.10; or (b) continue with this Agreement in accordance with its terms, in which event the Housing Authority will assign to the Developer any right of the Housing Authority to receive any condemnation award attributable to the Property.
II.4 T
itle Approval. As soon as practicable following the Effective Date, the Housing Authority will obtain a Preliminary Report from Title Company and deliver a copy thereof to the Developer. Within 30 days following the Developer’s receipt of a Preliminary Report for the entire Property, the Developer will deliver the Developer’s Title Notice to the Housing Authority. If the Developer fails to deliver the Developer’s Title Notice to the Housing Authority within such 30-day period, the Developer will be deemed to approve the status of title to the Property. Within 20 days following receipt by the Housing Authority of Developer’s Title Notice, if any, the Housing Authority shall serve Housing Authority’s Title Notice Response. If the Housing Authority does not serve Housing Authority’s Title Notice Response, if necessary, within such 20-day period, the Housing Authority will be deemed to elect not to remove from the Preliminary Report any matter objected to in Developer’s Title Notice. If the Housing Authority elects in Housing Authority’s Title Notice Response to cause the removal of any item objected to in Developer’s Title Notice from title to the Property, the Housing Authority will cause the removal of each such objectionable matter not later than the Escrow Closing Date. If the Housing Authority is unwilling or unable to cause the removal of any item objected to in Developer’s Title Notice, then, within 10 days following the Developer’s receipt of Housing Authority’s Title Notice Response stating that the Housing Authority is unwilling or unable to remove or cause the removal of any such objected-to item, the Developer may either (a) refuse to 20-31
16 accept the title to and conveyance of the Property, in which case the Parties will have the right, subject to Section II.4.2, to cancel the Escrow and terminate this Agreement without liability to either Party or any other person, by delivery of a written notice of termination to the other Party and to the Escrow Holder, or (b) if no notice is duly provided to Housing Authority within the 10 days, Developer shall be deemed to waive its objection to any items set forth in Developer’s Title Notice.
II.4.1 If at any time prior to the Close of Escrow the Title Company issues an updated Preliminary Report containing any previously undisclosed matter affecting title to the Property, or the Housing Authority becomes aware of any previously undisclosed matter affecting title to the Property following the delivery of the Developer’s Title Notice, the Housing Authority must provide written notice to the Developer of such matter, together with any updated Preliminary Report related to such matter. Subject to the Housing Authority’s obligations under Section 2.4.3 below, the Housing Authority and the Developer will have such rights and obligations with respect to such previously undisclosed title matters as they did with respect to any title matters set forth in the original Preliminary Report as set forth in Section II.4.
II.4.2 Before exercising any right a Party may have under this Section II.4 to cancel the Escrow and terminate this Agreement, such Party must notify the non- terminating Parties in writing of its election to terminate and must , upon a non- terminating Party’s request, which must be delivered, if at all, within 3 days following its receipt of the terminating Party’s notice of election to terminate, meet and confer with the non- terminating Party for a period of 30 days. During such time, the Parties wi ll meet as often as reasonably requested by any Party to negotiate, in good faith, methods and means by which the objectionable title matter may be eliminated or mitigated. Nothing herein wi ll constitute an agreement, representation, or warranty by any Party that an acceptable resolution of the objectionable title matter will be achieved, nor will any Party be obligated to expend any funds or undertake any other action whatsoever with respect to such title matter unless such agreement is reduced to a writing which is approved by the Parties, in their sole and absolute discretion. If, at the end of such 30 day period, the Parties have not been able to agree on a mutually acceptable method of resolving such title matter, or if any proposed agreement is disapproved by the Housing Authority Board, the Escrow will be cancelled, this Agreement shall be terminated without liability to any Party, and the Parties must proceed as provided in Section III.10.
II.4.3 The Housing Authority agrees not to place any matters of record against the Property (other than Permitted Exceptions and any matters arising from Housing Authority’s issuance or exercise of any remedy related to any approval for the Project), prior to the Close of Escrow, without the prior written consent of Developer.
II.5 D
eveloper Investigations. The Developer shall have until the expiration of the Due Diligence Period to complete, at its sole expense, all of its Due Diligence Investigations with respect to the entirety of the Property. The Developer will rely solely and exclusively upon the results of its Due Diligence Investigations of the Property, including, without limitation, investigations regarding geotechnical soil conditions, compliance with applicable laws pertaining to the use of the Property by the Developer and any other matters relevant to the condition or suitability of the Property for the Project, as the Developer may deem necessary or appropriate.
Housing Authority makes no representation or warranty to the Developer relating to the 20-32
17 condition of the Property or suitability of the Property for any intended use or development by the Developer. If the Developer does not timely deliver its Due Diligence Investigation Rejection Notice prior to the end of the Due Diligence Period, the Developer will be deemed to have accepted the Property in its current condition. If the condition of the Property is rejected, then either Party will have the right, subject to Section 2.5.3, to cancel the Escrow and terminate this Agreement, in its sole discretion, without liability to the other Party or any other person, by delivery of a written notice of termination to the other Party and Escrow Holder. By its failure to timely deliver its Due Diligence Investigation Rejection Notice, the Developer will accept the condition of the Property in its existing “AS IS,” “WHERE IS” and “SUBJECT TO ALL FAULTS” condition, without any liability of the Housing Authority whatsoever. During the Due Diligence Period the Developer will conduct such environmental assessment(s) of the Property as the Developer deems appropriate. If such assessment(s) do not reveal the presence of any Hazardous Substances on the Property in levels that exceed applicable Governmental Requirements, then the Housing Authority must promptly and at its sole cost and expense install security fencing around the Property. If such assessment(s) do reveal the presence of any Hazardous Substances on the Property in levels that exceed applicable Governmental Requirements, then the Housing Authority and the Developer shall negotiate in good faith in an effort to reach agreement as to the allocation of responsibility and cost of remediation thereof.
II.5.0 Any Due Diligence Investigations of the Property by the Developer shall not unreasonably disrupt any then existing use or occupancy of the Property, if any, or the operations of the Housing Authority. The Developer will be liable for any damage or injury to any person or property arising from the acts of the Developer, its employees, agents or representatives during the course of any Due Diligence Investigations on the Property and the Developer will indemnify, defend with counsel reasonably acceptable to the Housing Authority and hold harmless the Housing Authority and its elected officials, officers, directors, attorneys, contractors, agents and employees from any and all actual or alleged liens, claims, demands or liability arising from any Due Diligence Investigations by the Developer on the Property other than from discovery of existing conditions on the Property. Prior to commencing any Due Diligence Investigations on the Property, the Developer must deliver copies of policies or certificates of insurance to the Housing Authority evidencing compliance by the Developer with the liability insurance requirements of Section V.3.
II.5.1 Before exercising any right a Party may have under this Section II.5 to cancel the Escrow and terminate this Agreement, such Party must notify the non-terminating Party in writing of its election to terminate and must , upon a non- terminating Party’s request, which must be delivered, if at all, within 3 days following its receipt of the terminating Party’s notice of election to terminate, meet and confer with the non- terminating Party for a period of 30 days.
During such time, the Parties will meet as often as reasonably requested by any Party to negotiate, in good faith, methods and means by which the objectionable due diligence matter may be eliminated or mitigated. Nothing herein will constitute an agreement, representation, or warranty by any Party that an acceptable resolution of the objectionable due diligence matter will be achieved, nor will any Party be obligated to expend any funds or undertake any other action whatsoever with respect to such due diligence matter unless such obligation is reduced to a writing which is approved by the Parties, in their sole and absolute discretion. If, at the end of such 30-day period, the Parties have not been able to agree on a mutually acceptable method of resolving the objectionable due diligence matter, or if any proposed agreement is disapproved by the Housing 20-33
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18 Authority Board, the Escrow shall be cancelled, this Agreement shall be terminated without liability to any Party, and the Parties shall proceed pursuant to Section III.10.
II.6 D eveloper to Obtain all Project Entitlements. Developer shall develop and present to Housing Authority staff, for review, the following (collectively, the “Plans and Specifications”), subject to the Housing Authority’s Executive Director’s sole and absolute discretion:
II.6.1.1 A complete conceptual development plan for the Project on the Property that describes and depicts: ( a) the location and placement of proposed buildings and (b) the architecture and elevations of the proposed buildings; II.6.1.2 The proposed unit mix consistent with this
Agreement, showing unit size and affordability levels, including any Housing Authority approved managers’ units, for the Project;
II.6.1.3 A proposed time schedule and cost estimates for the development of the Project on the Property; and
II.6.1.4 A proposed financing plan identifying financing sources for all private and public improvements proposed for the Project; and II.6.1.5 Any and all Construction and Engineering Plans.
II.6.2 The City of Rancho Mirage’s zoning, building and land use regulations (whether contained in ordinances, the City’s municipal code, conditions of approval, policies, practice or elsewhere, collectively, the “Housing Authority Requirements”) will be applicable to the use and development of the Project on the Property by the Developer. The Developer acknowledges that all Plans and Specifications and any changes to the Plans and Specifications will be subject to the Housing Authority Requirements. No action by the Housing Authority with reference to this Agreement or any related documents shall be deemed to constitute a waiver of any Housing Authority Requirements regarding the Property, the Project, the Developer, any successor-in-interest of the Developer or any successor-in-interest to the Property. No entitlement, permit or other approval from the Housing Authority for development of the Project on the Property will attach to any portion of the Property or otherwise become effective to allow the Developer to develop the Project on the Property until after the Developer owns fee title to that portion of the Property to which such entitlement, permit or other approval pertains. Under no circumstances may the Developer commence construction of any portion of the Project on the Property prior to the Developer owning fee title to the Property.
II.6.3 The discretionary approval by Housing Authority of the Scope of Development and Construction Plans, as set forth herein, will not be binding on the Rancho Mirage Planning Commission, or the City, regarding any approvals of the Project required by such bodies.
Housing Authority’s review and disapproval/approval of such Scope of Development and Construction Plans is outside the context of any review City performs in its regulatory/permitting capacity, and Housing Authority’s review shall be at its sole and absolute discretion. The Developer obtains no right to develop the Project on the Property or any portion of the Property 20-34
19 by virtue of this Agreement, except that following the Close of Escrow, the Developer will possess the same rights as any other owner of property within the Housing Authority that desires to develop its property in a manner consistent with the City’s General Plan. If any revisions of the Scope of Development are required by a Governmental Agency (other than the Housing Authority) having jurisdiction over the Property or the Project, the Developer will promptly make any such revisions that are generally consistent with the Scope of Development.
II.6.4 Notwithstanding any provision to the contrary in this Agreement, following the Close of Escrow, the Developer agrees to accept and comply fully with any and all conditions of approval applicable to all approvals, permits and other governmental actions regarding the development or operation of the Project on the Property, so long as such conditions of approval are consistent with the Scope of Development and this Agreement in all material respects.
II.6.5 Developer to Pay All Costs and Expenses . Except as may otherwise be provided in Article VI of this Agreement, the Parties agree that the Housing Authority is under no obligation to provide any financial assistance to the Developer in connection with the Project. The Developer will be solely responsible for paying for the costs of all design work, construction, labor, materials, fees and permit expenses associated with the Project. The Developer must pay any and all fees pertaining to the review and approval of the Project by the Housing Authority, Planning Commission and/or City Council, any other Governmental Agency and utility service providers, including the costs of preparation of all required construction, planning and other documents reasonably required by a Governmental Agency pertinent to the development or operation of the Project on the Property, including, but not limited to, specifications, drawings, plans, maps, permit applications, land use applications, zoning applications, environmental review and disclosure documents and design review documents. The Developer must pay for any and all costs, including, but not limited to, the costs of design, construction, relocation and securing of permits for sewer or utility improvements and connections that may be required in development of the Project, whether located on or off of the Property. The Developer must obtain any and all necessary approvals prior to the commencement of applicable portions of construction, and the Developer must take reasonable precautions to ensure the safety and stability of surrounding properties during said construction. In accordance with this Section II.6.5, Developer will be responsible for the payment of the costs, or immediate reimbursement to the Housing Authority upon delivery of an invoice for the costs, of the following:
II.6.5.1 all fees or expenses of engineers, architects, financial consultants, legal, planning or other consultants or contractors, retained by the Developer for any study, analysis, evaluation, report, schedule, estimate, environmental review, planning and/or design activities, drawings, specifications or other activity or matter relating to the P roperty or the Project or the negotiation of this Agreement that may be undertaken by the Developer; and
II.6.5.2 all fees, charges and costs, make all deposits and provide all bonds or other security associated with the submission to and processing by the Housing Authority of any and all applications and other documents and information to be submitted to the Housing Authority or City by the Developer pursuant to this Agreement or otherwise associated with the Project; and 20-35
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20 II.6.5.3 The Developer must obtain all entitlements, permits and other approvals for use and development of the Project on the Property from each Governmental Agency, within the time period for such actions specifically set forth in the Schedule of Performance, subject to any extensions of time authorized by this Agreement upon the occurrence of an Unavoidable Delay.
II.7 Delivery of Property Free of Occupants. A
t the Close of Escrow, the Housing
Authority must deliver possession of the Property to Developer free and clear of occupancy by any persons and of any contractual rights created by or with the consent of the Housing Authority for any person or entity (other than Developer) to use or occupy the Property.
II.8 Project Marketing Plan.
At least 45 calendar days prior to the Close of Escrow, Developer must submit to the Housing Authority an affirmative fair housing marketing plan for the Project. Within 10 calendar days after the Housing Authority receives such marketing plan submitted by Developer, the Housing Authority will approve or disapprove such marketing plan. The marketing plan must include provisions to ensure that Developer will use commercially reasonable efforts to market the Project to eligible residents of the City, including but not limited to (a) no later than 90 days prior to completion of construction of the Project, notifying local government and nonprofit agencies serving Low, Very-Low, 40% Households and Extremely Low Income Households ( in the City (a list of suggested organizations will be provided to Developer by the Housing Authority) of the availability of the Qualifying Units and requesting that these organizations assist in publicizing the availability of the Qualifying Units to their members and clients; (b) placing a sign on the Property advertising the availability of the Qualifying Units and providing contact information throughout the marketing period; The Housing Authority’s failure to approve such marketing plan within the specified 10 calendar day period, will constitute Housing Authority’s deemed approval of such marketing plan.
ESCROW INSTRUCTIONS
III.1 Opening of Escrow. For purposes of this Agreement, the opening of Escrow will be the first date on which a fully executed copy of this Agreement is deposited with Escrow Holder (“Escrow Opening Date”) (which may be deposited with Escrow Holder by electronic transmission, if acceptable to Escrow Holder). The Developer must cause the Escrow to be opened within 5 days following the Effective Date. Escrow Holder must promptly confirm in writing to each of the Parties the escrow number assigned to this transaction and the Escrow Opening Date. This ARTICLE III will constitute the joint escrow instructions of the Housing 20-36
ARTICLE III.
21 Authority and the Developer to Escrow Holder for conduct of the Escrow to complete the purchase and sale of the Property between them, as contemplated in this Agreement.
III.2 C onditions to Close of Escrow. The conditions set forth below must be satisfied or waived in writing by the respective benefited Party on or before the Escrow Closing Date or the Party benefited by any unsatisfied condition will not be required to proceed to close Escrow.
III.2.1 Developer’s Conditions to Close of Escrow .
The Developer’s obligation
to purchase the Property from the Housing Authority on the Escrow Closing Date will be subject to the satisfaction of the following conditions precedent, each of which can only be waived in writing by the Developer:
III.2.1.1 T
he Developer agrees, or is deemed to agree, to
accept the title to and conveyance of the Property, pursuant to Section II.4; III.2.1.2 The Developer fails to deliver a Due Diligence Investigation Rejection Notice to the Housing Authority prior to the expiration of the Due Diligence Period;
III.2.1.3 Developer has received a reservation letter from TCAC reserving Tax Credits for the Project;
III.2.1.4 Developer has received the commitments for funding to make the construction and operation of the Project financially feasible consistent with the Project Budget;
III.2.1.5 The Title Company is unconditionally committed to issue the Title Policy for the Property, subject to any Permitted Exceptions, to the Developer;
III.2.1.6 Developer approves the Escrow Holder’s estimated Escrow closing/settlement statement;
III.2.1.7 The representations, warranties and covenants of the Housing Authority set forth in Section 0 are true and correct in all material respects on the Effective Date and on the Escrow Closing Date;
III.2.1.8 The Developer has obtained all entitlements required in connection with the development of the Property, subject to conditions of approval reasonably acceptable to Developer (provided, however, nothing herein shall be interpreted or deemed to prevent or li mit the City’s regulatory authority to impose conditions of approval of entitlement), any applicable appeal period has expired without appeal having been filed or, if an appeal is filed, such appeal has been denied, and no legal action has been instituted against Developer or the Housing Authority alleging the invalidity of such entitlements;
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22 III.2.1.9 The Housing Authority has completed all of its material obligations required by this Agreement to be completed prior to the Close of Escrow; and
III.2.1.10 The Housing Authority deposits the items into the Escrow required by Section III.3.
III.2.2 Housing Authority ’s Conditions to Close of Escrow. The Housing Authority’s obligation to sell the Property to the Developer on or before the Escrow Closing Date will be subject to the satisfaction of the following conditions precedent, which can only be waived in writing by the Housing Authority:
III.2.2.1 The Developer agrees, or is deemed to agree, to accept the title to and conveyance of the Property, pursuant to Section II.4; III.2.2.2 The Developer fails to deliver a Due Diligence Investigation Rejection Notice to the Housing Authority prior to the expiration of the Due Diligence Period;
III.2.2.3 Developer has obtained all approvals of City and Housing Authority, including but not limited to approval of the Construction Plans, which are subject to Housing Authority’s sole and absolute discretion, and subject to City’s review in accordance with its police powers and all applicable federal, state and local laws, rules and regulations.
III.2.2.4 The Developer submits to the Housing Authority evidence satisfactory to the Housing Authority, in the Housing Authority’s reasonable discretion, that the Developer has obtained all entitlements necessary for the development of the Property from each applicable Governmental Agency, including the Housing Authority, including issuance of a grading permit, which must be accomplished no later than seven years after the effective date of this Agreement, as set forth in the Schedule of Performance;
III.2.2.5 The Developer has completed all of its material obligations required by this Agreement to be completed prior to the Close of Escrow; III.2.2.6 The Developer submits to the Housing Authority the Developer’s organizational documents;
III.2.2.7 The Developer submits to the Housing Authority the marketing plan for the Project pursuant to Section 2.8; III.2.2.8 The Developer submits to the Housing Authority a copy of the construction contract for the Project in substantially final form (with a copy of the final construction contract being delivered to the Housing Authority by Close of Escrow);
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23 III.2.2.9 The Developer submits to the Housing Authority copies of the Construction Financing Documents in substantially final form and the Housing Authority has reviewed and approved the form of an amended and restated agreement of limited partnership for the entity established to receive the capital contributions of the Tax Credit Investor (with copies of the final instruments for both being delivered to the Housing Authority through Close of Escrow); III.2.2.10 The Developer submits to the Housing Authority a document evidencing a commitment from the Tax Credit Investor to Developer to provide the Tax Credit Equity;
III.2.2.11 The Developer submits to the Housing Authority documents evidencing a commitment from an Institutional Lender to Developer to provide the Permanent Loan;
III.2.2.12 The Developer submits to the Housing Authority documents evidencing a commitment from the Lender(s) of all Subordinate Loan(s), if any, to Developer to provide the Subordinate Loan(s);
III.2.2.13 Developer has received any other commitments for funding to make the construction and operation of the Project financially feasible consistent with the Project Budget;
III.2.2.14 The representations, warranties and covenants of the Developer set forth in Section I.2.1 are true and correct in all material respects on the Effective Date and on the Escrow Closing Date; and
III.2.2.15 The Developer deposits the items into the Escrow required by Section III.3.
III.3 D
eveloper’s Escrow Deposits. Following satisfaction or waiver of each of the Developer’s conditions to Close of Escrow set forth in Section III.2.1, the Developer shall de
posit the following funds and documents into Escrow at least 1 business day prior to the Escrow Closing Date:
III.3.1 P CO Statement . A PCO Statement executed by an authorized representative of the Developer.
III.3.2 Quitclaim Deed . The Quitclaim Deed , executed by an authorized representative of the Developer, in recordable form.
III.3.3 Notice of Agreement. The Notice of Agreement executed by an authorized representative of the Developer , in recordable form, to be recorded against the Property at the Close of Escrow.
III.3.4 Regulatory Agreement . T he Regulatory Agreement executed by an authorized representative of Developer, in recordable form, to be recorded against the Property at the Close of Escrow.
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24 III.3.5 Construction Financing Security Instrument(s) . Permitted Security Instrument(s) securing repayment of the Construction Financing, executed by an authorized representative of Developer, in recordable form, to be recorded against the Property at the Close of Escrow.
III.3.6 Subor dinate Loan(s) Security Instrument(s) . Permitted Security Instrument(s) securing repayment of such of the Subordinate Loan(s) closing and funding at the Close of Escrow, if any, executed by an authorized representative of Developer , in recordable form, to be recorded against the Property at the Close of Escrow.
III.3.7 Subor dinate Loan Land Use Restriction Agreement(s) . Agreement(s) restricting occupancy and rents in the Project as required by the makers of one or more of the Subordinate Loans, if any, executed by an authorized representative of Developer , in recordable form, to be recorded against the Property at the Close of Escrow.
III.3.8 Subor dination Agreements . Subordination agreement(s) subordinating any financing to this Agreement and the Regulatory Agreement, reasonably approved by the Housing Authority and executed by an authorized representative of Developer, in recordable form, to be recorded against the Property at the Close of Escrow. For the avoidance of doubt, the Regulatory Agreement will be Senior to any lien placed upon the Property or any portion thereof, including the lien of any mortgage.
III.3.9 Other Funds and Documents . S
uch documents required from Developer
under the terms of this Agreement to close the Escrow, including funds required to pay all Escrow closing costs charged by the Escrow Holder in the performance of the Escrow Holder’s contractual or statutory obligations relating to the Escrow, payment of which will be the sole responsibility of Developer.
III.4 Housing Authority’
s Escrow Deposits. Following satisfaction or waiver of each of the Housing Authority’s conditions to Close of Escrow set forth in Section III.2.2, t he Housing Authority must deposit the following documents into Escrow at least 1 business day prior to the Escrow Closing Date:
III.4.1 Qu
itclaim Deed . The Quitclaim Deed executed by the authorized representative(s) of the Housing Authority in recordable form.
III.4.2 FIRPTA Affidavit. The FIRPTA Affidavit completed and executed by the authorized representative(s) of the Housing Authority.
III.4.3 Notice of Agreement. The Notice of Agreement executed by the authorized representative(s) of the Housing Authority in recordable form.
III.4.4 Regulatory Agreement . T he Regulatory Agreement signed by the authorized representative(s) of the Housing Authority in recordable form.
III.4.5 Other Documents . S uch other documents required from the Housing Authority under the terms of this Agreement to close the Escrow or by the Escrow Holder in the performance of the Escrow Holder’s contractual or statutory obligations regarding the Escrow. 20-40
25 III.5 Closing Procedure. When each of the Developer’s Escrow required deposits specified in Section III.3 and each of the Housing Authority’s Escrow required deposits specified in Section III.4 are deposited into Escrow, Escrow Holder must request confirmation in writing from both the Housing Authority and the Developer that each of their respective conditions to the Close of Escrow, as set forth in Section III.2, are satisfied or waived. Upon Escrow Holder’s receipt of such written confirmation from both the Housing Authority and the Developer, Escrow Holder will close the Escrow by doing all of the following:
III.5.1 Recordation of Documents . File the documents set forth in Section III.7 with the Office of the Recorder of the County, for recordation in the order set forth in Section III.7.
III.5.2 D istribution of Recorded Documents . Distribute each recorded document to the Party or person designated for such distribution in Section III.7.
III.5.3 P CO Statement . File the PCO Statement with the appropriate office of the County.
III.5.4 FIRPTA Affidavit . File the FIRPTA Affidavit with the United States Internal Revenue Service.
III.5.5 Title Policy. Obtain and deliver the Title Policy to the Developer.
III.5.6 Funds. Deliver all funds held by the Escrow Holder for the account of Housing Authority to Housing Authority, less any charges to the account of Housing Authority pursuant to the Escrow closing statement approved by the Housing Authority and the terms of this Agreement, and all other remaining funds held by the Escrow Holder for the account of Developer to Developer and less any other charges to the account of Developer pursuant to the Escrow closing statement approved by the Developer and to the terms of this Agreement.
III.6 Close of Escrow.
The Close of Escrow must occur on or before the Escrow
Closing Date. The Housing Authority and the Developer may mutually agree to change the Escrow Closing Date by joint written instruction to the Escrow Holder. The Housing Authority Executive Director is authorized to agree to one or more extensions of the Escrow Closing Date on behalf of the Housing Authority, in the Housing Authority Executive Director’s sole and absolute discretion. If for any reason the Close of Escrow has not occurred by the Escrow Closing Date, as it may have been extended, then any Party not then in default of this Agreement may cancel the Escrow and terminate this Agreement, subject to the notice and cure provisions of Section VII.1 (
to the extent applicable), without liability to any other Party or any other person for such termination and cancellation, by delivering written notice of termination to the other Party and Escrow Holder and, thereafter, the Parties shall proceed pursuant to Section III.10 if the non-terminating Party is not in default or pursuant to Section 7.1 or 7.1.4 (as applicable) if the non-terminating Party is in default. Without limiting the right of any Party to terminate this Agreement pursuant to the preceding sentence, if Escrow does not close on or before the Escrow Closing Date and if no Party has exercised its contractual right to cancel Escrow and terminate this Agreement before such time, then Escrow may close as soon as reasonably possible 20-41
26 following the first date on which Escrow Holder is in a position to close the Escrow pursuant to the terms and conditions of this Agreement.
III.7 R ecordation and Distribution of Documents. As applicable, Escrow Holder must cause the following documents to be recorded in the official records of the Recorder of the County in the following order of priority at the Close of Escrow: (a) the Quitclaim Deed; (b) the Regulatory Agreement; (c) Permitted Security Instrument(s) securing the Construction Financing; (d) the Notice of Agreement; (e) the Subordination Agreements described in Sections
3.3.8; and (f) any other documents to be recorded through the Escrow upon the joint instructions of the Housing Authority and the Developer. The Escrow Holder will deliver conformed copies of all documents filed for recording to the Housing Authority, the Developer and any other entity or person designated in the written closing escrow instructions of the Parties to receive an original or conformed copy of each such document. Each copy of a document filed for recording shall show all recording information. The Parties intend and agree that this Section 3.7 shall establish the relative priorities of the documents to be recorded in the official records of the County through the Escrow, by providing for recordation of Senior interests prior in time to junior interests, as provided in this Section 3.7.
III.8 Escrow Closing Costs, Taxes and Title Policy Premium. The Developer shall pay the Escrow fees and such other costs as Escrow Holder may charge for the conduct of the Escrow. Escrow Holder will notify the Developer and the Housing Authority of the costs to be borne by Developer at the Close of Escrow by delivering the Escrow Holder’s estimated closing/settlement statement to both the Housing Authority and the Developer at least 4 business days prior to the Escrow Closing Date. The Developer must pay the premium charged by the Title Company for the Title Policy, as well as all recording fees charged as reflected in the approved closing statement, all documentary transfer taxes, all Escrow fees, and any and all other charges, fees and taxes levied by a Governmental Agency arising from the conveyance of any portion of the Property through the transaction contemplated in this Agreement.
III.9 Escrow Cancellation Charges.
If the Escrow fails to close due to the Housing
Authority’s material default under this Agreement and the Escrow is cancelled and this Agreement is terminated, the Housing Authority must pay all ordinary and reasonable Escrow and title order cancellation charges. If the Escrow fails to close due to the Developer’s material default under this Agreement and the Escrow is cancelled and this Agreement is terminated, the Developer must pay all ordinary and reasonable Escrow and title order cancellation charges. If the Escrow fails to close for any reason other than the material default of either the Developer or the Housing Authority and the Escrow is cancelled and this Agreement is terminated, the Developer and the Housing Authority shall each pay one-half of any ordinary and reasonable Escrow and title order cancellation charges.
III.10 Escrow C
ancellation. If this Agreement is terminated and the Escrow cancelled pursuant to a contractual right granted to a Party in this Agreement to terminate this Agreement 20-42
27 and cancel the Escrow, other than due to the material default of another Party, the Parties must do each of the following:
III.10.1 Ca ncellation Instructions. The Parties will, within 3 business days of receipt of Escrow Holder’s written request, execute any reasonable Escrow cancellation instructions requested by Escrow Holder;
III.10.2 Ret
urn of Funds and Documents. Within 10 days of receipt by the Parties of a statement of Escrow and title order cancellation charges from Escrow Holder: (a) the Developer or Escrow Holder shall return to the Housing Authority any documents previously delivered by the Housing Authority to the Developer or Escrow Holder, (b) the Housing Authority or Escrow Holder must return to the Developer all documents previously delivered by the Developer to the Housing Authority or Escrow Holder; (c) Escrow Holder shall return to the Developer any funds deposited by Developer into Escrow, less the Developer’s share of customary and reasonable Escrow and title order cancellation charges as provided in Section 3.9, if any; and (d) Escrow Holder shall return to the Housing Authority any funds deposited by Housing Authority into Escrow if it has already been deposited, less the Housing Authority’s share of customary and reasonable Escrow and title order cancellation charges as provided in Section 3.9, if any.
III.11 Report to IRS. F
ollowing the Close of Escrow and prior to the last date on which such report is required to be filed with the Internal Revenue Service, if such report is required pursuant to Section 6045(e) of the Internal Revenue Code, Escrow Holder must report the gross proceeds of the purchase and sale of the Property to the Internal Revenue Service on Form 1099- B, W-9 or such other form(s) as may be specified by the Internal Revenue Service pursuant to Section 6045(e). Upon the filing of such reporting form with the Internal Revenue Service, Escrow Holder must deliver a copy of the filed form to the Housing Authority and the Developer.
PROJECT DEVELOPMENT
IV.1 Developer Covenant to Undertake Project. The Developer covenants for itself, its successors and assigns, to and for the benefit of the Housing Authority, that the Developer will commence and complete the development of the Project on the Property within the time period for such actions set forth in the Schedule of Performance. The Developer covenants and agrees for itself, its successors, and assigns, that the Property will be improved and developed with the Project in substantial conformity with the terms and conditions of this Agreement, the Scope of Development, the Schedule of Performance, any and all Construction Plans, and Plans and Specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and conditions of each Governmental Agency with jurisdiction over the Property or the Project. The covenants of this Section IV.1 s hall run with the
land of the Property until released by recordation of the Certificate of Completion.
IV.2 Construction Contract; Construction Schedule. Prior to commencing construction of the Project, Developer shall provide the Housing Authority with a copy of a 20-43
ARTICLE IV.
28 stipulated sum-based construction contract or guaranteed maximum price construction contract between Developer and its general contractor for all of the improvements required to be constructed by Developer hereunder, certified by Developer to be a true and correct copy thereof. Developer shall obtain building permits, and commence and complete construction of the Project, by the respective times established therefor in the Schedule of Performance.
IV.4 Construction Start and Completion of Project.
The Developer shall commence construction of the Project no later than the Project Commencement Date, and thereafter to be completed in a good and workmanlike manner in substantial conformity with the approved Plans and Specifications and conditions for the Project approved by the Housing Authority and the Schedule of Performance, subject to Unavoidable Delays. Promptly upon Completion of Construction of the Project, Developer must request that the Housing Authority issue an executed Certification of Completion and if the Housing Authority determines that the final Certificate of Occupancy for the Project has been issued, the Housing Authority must execute and deliver a Certificate of Completion to the Developer. The Developer will, promptly upon completion of the work of improvement(s) for the Project , cause the Project to be inspected by each Governmental Agency with jurisdiction over the Project, must correct any defects and deficiencies that may be disclosed by any such inspection and must cause all occupancy certificates and other licenses, permits and author izations necessary for the operation and occupancy of the completed Project to be promptly issued. The Developer shall do and perform all of the foregoing acts and things and cause all such occupancy certificates, licenses, and authorizations for the Project to be issued on or before the date set forth therefor in the Schedule of Performance as the completion date for the Project. After construction of the Project has commenced, the Developer shall not permit construction of the Project to cease or be suspended for a time period in excess of 30 consecutive calendar days, subject to Unavoidable Delays.
IV.5 Co
mpliance with Laws. All work performed in connection with the development and construction of the Project shall comply with all Governmental Requirements.
IV.6 Schedule of Performance. The Schedule of Performance establishes various dates and times for the Developer and the Housing Authority the conditions precedent to the Close of Escrow. The Parties agree that time is of the essence in the performance of such tasks and the satisfaction of conditions precedent, in view of the large investment of resources that all Parties recognize will be required for the Project. If Developer recognizes that the date or time for the performance of a task or the satisfaction of a condition set forth in either the text of this Agreement or in the Schedule of Performance might not be achieved, then prior to such date or time Developer must notify the Housing Authority of the same and the Parties shall consider whether a modification to the text of this Agreement or to the Schedule of Performance is indicated. Any decision to approve a modification to a time or date established in either the text of this Agreement or the Schedule of Performance shall be subject to the sole discretion of the Housing Authority. Any modification of a time or date for performance of a particular task or satisfaction of a particular condition may be approved on behalf of the Housing Authority by the Housing Authority Executive Director, in his or her reasonable discretion. If performance of a task or satisfaction of a condition in the Schedule Performance is prevented or delayed by 20-44
29 Unavoidable Delays, the deadline for completion of such task or satisfaction of such condition will be extended on a day-for-day basis equal to the delay caused by such Unavoidable Delays.
IV.7 D eveloper Attendance at Housing Authority Board Meetings. The Developer agrees to have one or more of its employees or consultants who are knowledgeable regarding this Agreement and the development of the Project, such that such person(s) can meaningfully respond to Housing Authority questions regarding the progress of the Project, attend Housing Authority Board when requested to do so on not less than 10 days prior written notice by Housing Authority staff.
IV.8 Housing Authority’
s Right to Inspect Project and Property. Officers,
employees, agents and representatives of the Housing Authority designated by the Housing Authority Executive Director will have the right of reasonable access to the Property, without the payment of charges or fees, during normal construction hours during construction of the Project.
Such officers, employees, agents or representatives of the Housing Authority must observe safety protocols generally applicable to all visitors to the Project when on the Property. Any and all Housing Authority officers, employees, agents or representatives who enter the Property must identify themselves at the construction management office when they enter the Property, and must, when on the Property, be accompanied by a representative of the Developer. The Developer must make a Developer representative available for this purpose at all times during normal construction hours, upon reasonable notice from the Housing Authority. The Housing Authority must indemnify and hold the Developer harmless from injury, property damage or liability arising out of the exercise by the Housing Authority of the right of access to the Property provided in this Section 4.6, other than injury, property damage or liability arising from the negligence or willful misconduct of the Developer or its officers, agents or employees. If in the Housing Authority’s reasonable judgment it is necessary, the Housing Authority will have the further right, from time to time, to retain one or more consultants to inspect the Project and verify compliance by the Developer with the provisions of this Agreement. The Developer acknowledges and agrees that any such inspections are for the sole purpose of protecting the Housing Authority’s rights under this Agreement, are made solely for the Housing Authority’s benefit, and that all such inspections may be superficial and general in nature made for the purpose of informing the Housing Authority of the progress of the Project and the conformity of the Project with the terms and conditions of this Agreement. As a consequence of the foregoing, Developer acknowledges and agrees that it will not be entitled to rely on any such inspection(s) as constituting an approval, satisfaction or acceptance of any materials, workmanship, conformity of the Project with this Agreement or otherwise. The Developer agrees to make its own regular inspections of the Project to determine that the quality of the Project and all other requirements of the work of construction of the Project are being performed in a manner satisfactory to the Developer. The Developer also agrees to immediately notify the Housing Authority in writing should the Developer’s inspections or those of the Lender supplying the Construction Financing show any matters that will prevent the entire Project from being completed by the Project Completion Date set forth in the Schedule of Performance. Without limiting the foregoing, the Developer will permit the Housing Authority upon reasonable notice to examine and copy all books and account records and other papers relating to the Property and the construction of the Project. The Developer will use commercially reasonable efforts to cause 20-45
30 all contractors, subcontractors and materialmen to cooperate with the Housing Authority to enable such examination.
IV.9 C ost of Construction. The cost and expense of completing the Project, including, without limitation, constructing all legally imposed on- and off-site improvements and providing all utilities and of applying for all required land use, construction, inspection, plan check and development impact fees imposed by the Housing Authority or City, will be borne by Developer at its sole cost, expense and liability except as otherwise provided in this Agreement. Developer will bear all costs and expenses incurred to process and obtain all entitlements and must bear all costs and expenses (except to the extent expressly set forth otherwise in this Agreement), associated with satisfaction of any and all terms, conditions, requirements, mitigation measures and other exactions imposed on, or required in connection with, such entitlements. Developer shall benefit from a 50% reduction in development impact fees in accordance with the City’s Housing Element (Policy H 10) and Section 17.22.030 (Affordable Housing Incentives/Density Bonus Provisions) of the Rancho Mirage Municipal Code.
IV.10 Prevailing Wages. The Developer acknowledges that the Housing Authority has not made any representation, express or implied, to the Developer or any person associated with the Developer regarding whether laborers employed to construct the Project must be paid the prevailing per diem wage rate for their labor classification, pursuant to Labor Code Sections 1720, et seq. The Developer agrees with the Housing Authority that the Developer will be solely responsible to determine whether construction of the Project must be done at prevailing wage rates.
IV.10.0 T he Developer, on behalf of itself, its successors, and assigns, waives and releases the Housing Authority from any right of action that may be available to it pursuant to Labor Code Sections 1726 and 1781. The Developer acknowledges the protections of Civil Code Section 1542 relative to the waiver and release set forth below, which reads as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR OR RELEASING PARTY DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT
THE TIME OF EXECUTING THE RELEASE AND THAT , IF
KNOWN BY HIM OR HER , WOULD HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR
OR RELEASED PARTY.”
BY INITIALING BELOW, THE DEVELOPER KNOWINGLY AND VOLUNTARILY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE WAIVERS AND RELEASES OF THIS SECTION IV.10.0.
_________________
Developer’s Initials
IV.10.1 Additionally, in accordance with Section VII.9, the Developer shall indemnify, defend with counsel acceptable to the Housing Authority and hold the Housing 20-46
31 Authority harmless against any claims pursuant to Labor Code Sections 1726 and 1781 arising from this Agreement or the construction or operation of the Project IV.11 Intentionally Omitted.
IV.12 Certificate of Completion. Following the substantial Completion of Construction of the Project, and upon written request from the Developer for issuance of a Certificate of Completion for the Project, the Housing Authority shall inspect the Project to determine whether or not the Project has been substantially completed in compliance with this Agreement. If the Housing Authority determines that the Project is complete and in compliance with this Agreement, the Housing Authority Executive Director will furnish the Developer with a Certificate of Completion for the Project. If the Housing Authority determines that the Project is not in compliance with this Agreement, the Housing Authority Executive Director must send written notice specifying each non-conformity to the Developer. Upon issuance by the Housing Authority of the final certificate of occupancy for the Project, the Housing Authority must furnish the Developer with a Certificate of Completion for the Project.
IV.12.0 The
Certificate of Completion, upon issuance, will be evidence of the Housing Authority’s conclusive determination of Developer’s satisfactory substantial completion of the entirety of the Project pursuant to the terms of this Agreement.
IV.12.1 The Housing Authority will not unreasonably withhold the issuance of a Certificate of Completion. After recordation of a Certificate of Completion, any person then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Property improved with the Project will not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement regarding construction or installation of the Project except that such person will be bound by any reservations, covenants, conditions, restrictions and other interests recorded against the Property pursuant to this Agreement.
IV.12.2 A Certificate of Completion will not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the Project, or any party thereof. A Certificate of Completion shall not be deemed to constitute a notice of completion under Section 3093 of the California Civil Code, nor shall it act to terminate the continuing covenants, restrictions or conditions contained in any instruments recorded against the Property pursuant to this Agreement. A Certificate of Completion is not evidence of the compliance of the Project with any Housing Authority Requirements or any building code, conditions of approval, land use, zoning or other requirements of the Housing Authority or any Governmental Agency with jurisdiction over the Property, other than the Housing Authority.
DEVELOPER COVENANTS
V.1 Obligation to Refrain from Discrimination. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that there shall be no discrimination against or segregation of any person, or group of 20-47
ARTICLE V.
32 persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Developer, itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub-tenants, sub-lessees or vendees of the Property, except only as may be necessary for Developer to comply with regulatory agreements, covenants and other agreements regulating occupancy of the Project. Subdivision (d) of Section 51 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to this Section 5.1 and to Section 5.2.1 below. The covenant of this Section V.1 shall run with the Property and shall be enforceable against the Developer and its successors and assigns in perpetuity.
V.2 F
orm of Non-Discrimination and Non-Segregation Clauses. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:
V.2.1 T
he Developer and such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property (or any portion thereof) on the basis of sex, marital status, race, color, religion, creed, ancestry or national origin of any person.
V.2.2 All deeds, leases or contracts pertaining to the Property shall contain or be subject to substantially the following non-discrimination or non-segregation covenants:
V.2.2.1 In deeds: “The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub- tenants, sub- lessee, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”
V.2.2.2 In leases: “The lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein le ased nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants lessees, sub- lessee, sub-tenants, or vendees in the premises herein leased.” 20-48
33 V.2.2.3 In contracts: “There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed or leased, nor shall the transferee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sub- lessees, sub -tenants, or vendees of the premises herein transferred.” The foregoing provision shall be binding upon and shall obligate the contracting party or parties and any subcontracting party or parties, or other transferees under the instrument.
The covenant of this Section V.2 will run with title to the Property in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Quitclaim Deed.
V.3 E
nvironmental Indemnity of the Housing Authority by the Developer. The Developer agrees, at its sole cost and expense, to fully indemnify, protect, hold harmless, and defend (with counsel selected by the Developer and reasonably approved by the Housing Authority) the Housing Authority and its commissions, agents, attorneys, officers, employees, and authorized representatives (collectively, the “Indemnified Parties”) from and against any and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of action, judgments, suits, proceedings, costs, disbursements and expenses, including, without limitation, attorney fees, disbursements and costs of attorneys, environmental consultants and other experts, and all foreseeable and unforeseeable damages or costs of any kind or of any nature whatsoever (collectively, “Environmental Claims”) that may, at any time, be imposed upon, incurred or suffered by, or claimed, asserted or awarded against, the Indemnified Parties, relating to or arising from any of the following “Environmental Matters” existing or occurring during or arising from the Developer’s ownership of the Property or construction or operation of the Project:
V.3.1 T
he presence of Hazardous Substances on, in, under, from or affecting all or any portion of the Property or the Project.
V.3.2 The storage, holding, handling, release, threatened release, discharge, generation, leak, abatement, removal or transportation of any Hazardous Substances on, in, under, from or affecting the Property or the Project.
V.3.3 The violation of any law, rule, regulation, judgment, order, permit, license, agreement, covenant, restriction, requirement or the like by the Developer, its agents or contractors, relating to or governing in any way Hazardous Substances on, in, under, from or affecting the Property or the Project.
V.3.4 The failure of the Developer, its agents or contractors, to properly complete, obtain, submit and/or file any and all notices, permits, licenses, authorizations, covenants and the like relating to Hazardous Substances on, in, under, from or affecting the Property or the Project in connection with the Developer’s activities on the Property or regarding the Project. 20-49
34 V.3.5 The implementation and enforcement by the Developer, its agents or contractors of any monitoring, notification or other precautionary measures that may, at any time, become necessary to protect against the release, potential release or dischar ge of Hazardous Substances on, in, under, from or affecting the Property or the Project.
V.3.6 The failure of the Developer, its agents or contractors, in compliance with all applicable Environmental Laws, to lawfully remove, contain, transport or dispose of any Hazardous Substances existing, stored or generated on, in, under or from the Property or the Project.
V.3.7 Any investigation, inquiry, order, hearing, action or other proceeding by or before any Governmental Agency in connection with any Hazardous Substances on, in, under, from or affecting the Property or the Project or the violation of any Environmental Law relating to the Property or the Project.
V.3.8 The Developer shall pay to the Indemnified Parties all costs and expenses including, without limitation, reasonable attorneys’ fees and costs, incurred by the Indemnified Parties in connection with enforcement of the aforementioned environmental indemnity.
V.3.9 Notwithstanding anything to the contrary in this Section 5.3, Developer shall have no obligation to indemnify any of the Indemnified Parties with respect to Environmental Matters or Environmental Claims (i) relating to or arising from Hazardous Substances that were present on, in or under the Property prior to the Close of Escrow, (ii) to the extent relating to or arising from the active negligence or willful misconduct of any of the Indemnified Parties.
V.4 I
nsurance. In order to protect the Housing Authority and its commissions, agents, attorneys, officers, employees and authorized representatives (collectively, “Additional Insureds”) against any and all claims and liability for death, injury, loss and damage resulting from the Developer’s actions in connection with this Agreement, the Property, and the Project, the Developer shall secure and maintain the insurance coverage described in and required by this Section V.4. T
he Housing Authority shall not have any obligation under this Agreement until the Developer provides the required policies and/or certificates evidencing the insurance required by this Section V.4 to the Housing Authority and the Housing Authority approves such evidence of insurance. The Developer shall pay any deductibles and self-insured retentions under all insurance policies issued in satisfaction of the terms of this Agreement. Developer shall retain all insurance policies as set forth in this Section V.4 until recordation of the Certificate of Completion.
V.4.1 W
orkers’ Compensation Insurance Requirement . The Developer shall submit written proof that the Developer is insured against liability for workers’ compensation in accordance with the provisions of Section 3700 of the Labor Code. By executing this Agreement, the Developer makes the following certification, required by Section 1861 of the Labor Code:
“I am aware of the provisions of section 3700 of the Labor Code w
hich require every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with suc h 20-50
35 provisions before commencing the performance of the work of the Agreement.”
The Developer shall require each contractor and sub-contractor performing work on the Project to provide workers’ compensation coverage for all of such contractor’s or sub- contractor’s employees, unless the contractor’s or sub -contractor’s employees are covered by workers’ compensation insurance provided by the Developer. If any class of employees engaged in work or services performed in connection with the Project is not covered by Labor Code Section 3700, the Developer shall provide and/or require each contractor or sub -contractor to provide adequate workers’ compensation insurance covering such employees. Each workers’ compensation policy procured pursuant to this Section V.4.1 shall contain a full waiver of subrogation clause in favor of the Additional Insureds.
V.4.2 L
iability and Permanent Insurance Requirements.
V.4.2.1 The Developer shall maintain in full force and effect, from the Effective Date until the issuance of the Certificate of Completion, subject to Section V.4.2.4, the following insurance coverage:
V.4.2.1.1 Commercial General Liability Insurance coverage, including, but not limited to, Premises-Operations, Contractual Liability Insurance (specifically covering all indemnity obligations of the Developer pursuant to this Agreement), Products- Completed Operations Hazards, Personal Injury (including bodily injury and death) and Property Damage for liability arising out of the construction of the Project and/or the Developer’s operations concerning the Property or the Project. The commercial general liability insurance coverage shall have minimum limits for Bodily Injury and Property Damage liability of $1,000,000 each occurrence and $2,000,000 aggregate.
V.4.2.1.2 Automobile Liability Insurance against claims of Personal Injury (including bodily injury and death) and Property Damage covering all owned, non-owned, leased, hired and non-owned vehicles used by the Developer with minimum limits for Bodily Injury and Property Damage of $2,000,000 combined single limit. Such insurance may be provided by a business or commercial vehicle policy.
V.4.2.1.3 If the Developer hires a consultant to provide design services, such as architectural or engineering services in connection with the Project, or any portion of the Project, the Developer shall require each such consultant to provide Professional Liability (Errors and Omissions) Insurance, for liability arising out of, or in connection with, the performance of such design services, with limits of not less than $2,000,000.
V.4.2.1.4 Upon Completion of Construction of the Project or any completed portion thereof, the Developer shall maintain Fire and Extended Coverage Insurance, excluding earthquake coverage, on the Project on a blanket basis or with an agreed amount clause in amounts not less than 100% of the replacement value of the Project or portion thereof.
V.4.2.2 During the construction of the Project, the Developer shall require that its general contractor and each major sub-contractor performing work 20-51
36 on the Project maintain the following insurance coverage, as specified below, at all times during the performance of said work, or the Developer must provide for such contractor’s “wrap” coverage, as specified below, at all times during the performance of said work:
V.4.2.2.1 The Developer will maintain Builder’s Risk
Insurance to be written on an All Risk Completed Value form, in an aggregate amount equal to 100% of the completed insurable value of the Project or portion of the Project on which such contractor is performing work.
V.4.2.2.2 Each general contractor and each major sub-
contractor shall maintain Commercial General Liability Insurance with limits of not less than $1,000,000 per occurrence and $2,000,000 aggregate to protect the Developer during the construction of the Project from claims involving bodily injury and/or death and damage to the property of others.
V.4.2.2.3 Each general contractor and each major sub-
contractor will maintain Automobile Liability Insurance against claims of personal injury (including bodily injury and death) and property damage covering all owned, leased, hired and non-owned vehicles used in the performance of the contractor’s obligations with minimum limits for bodily injury and property damage of $1,000,000 each occurrence and $2,000,000 aggregate.
Such coverage may be provided with a combination of commercial automobile liability insurance and an excess or umbrella liability policy. Such automobile liability insurance may be provided by a business or commercial vehicle policy.
V.4.2.3 The insurance required in Section V.4.2.1 and
Section V.4.2.2 above shall include endorsements naming the Additional Insureds as additional insured for liability arising out of this Agreement and any operation related to this Agreement.
V.4.2.4 Any insurance coverage required under this
Agreement, with the exception of the Professional Liability (Errors and Omissions) Insurance referenced in Section 5.4.2.1.3 above, shall be written on an “occurrence” basis.
The requirements of this Section V.4.2.4 will survive any expiration or termination of this Agreement and the recordation of the Quitclaim Deed and any Certificate of Completion.
V.4.2.5 Receipt by the Housing Authority of evidence of insurance that does not comply with the above requirements shall not constitute a waiver of the insurance requirements of this Agreement.
V.4.2.6 Subject to Section V.4.2.4, all of the insurance coverage required under this Section V.4 shall be maintained by the Developer or its contractors, as required by the terms of this Agreement, until the issuance of the Certificate of Completion and shall not be reduced, modified, or canceled without at least 30 days prior written notice to the Developer. The Developer shall immediately obtain replacement coverage for any required insurance policy that is terminated, canceled, non- renewed, or whose policy limits are exhausted or upon insolvency of the insurer that issued the policy.
20-52
■
37 V.4.2.7 All insurance to be obtained and maintained by the Developer under this Section V.4 shall be issued by a company or companies listed in the then current “Best’s Key Rating Guide” publication with a minimum of an “A:VII” rating and be admitted to conduct business in the State of California.
V.4.2.8 The Housing Authority will not accept self-insurance in satisfaction of the insurance requirements of this Section V.4.
V.4.2.9 All insurance obtained and maintained by the
Developer in satisfaction of the requirements of this Agreement shall be primary to and not contributing to any insurance maintained by the Additional Insureds.
V.4.2.10 Insurance coverage in the minimum amounts set
forth in this Section V.4 shall not be construed to relieve the Developer of any liability, whether within, outside, or in excess of such coverage and regardless of solvency or insolvency of the insurer that issues the coverage , nor shall it preclude the Additional Insureds from taking such other actions as are available to them under any other provision of this Agreement or otherwise at law.
V.4.3 Failure by the Developer to maintain all insurance coverage required by this Section V.4 in effect shall be an Event of Default by the Developer. The Housing Authority, at its sole option, may exercise any remedy available to it in connection with such an Event of Default.
Alternatively, the Housing Authority may, at its sole option, purchase any such required insurance coverage and the Housing Authority will be entitled to immediate payment from the Developer for any premiums and associated costs paid by the Housing Authority for such insurance coverage.
Any election by the Housing Authority to purchase or not to purchase insurance otherwise required to be carried by the Developer shall not relieve the Developer of its obligation to obtain and maintain the insurance coverage required by this Agreement.
PROJECT FINANCING
VI.1 Project Financing. Developer shall finance the development of the Project in accordance with the Project Budget. Further, Housing Authority and Developer agree that the financing of the Project shall comply with all of the following:
VI.1.1 Tax Credit Financing . T
o provide funds for the development and
construction of the Project, Developer shall in good faith apply for and obtain an allocation of Tax Credits to finance a portion of the Project Costs. Developer shall use commercially reasonably efforts to submit an application for an allocation of 4% Tax Credits by the first competitive 4% application funding round deadline following the Effective Date in which such an application can reasonably be submitted. If Developer does not receive an allocation of Tax Credits as a result of such application, the Developer agrees to use commercially reasonably efforts to submit an application for an allocation of Tax Credits for the next available competitive 4% application funding round of TCAC’s allocation meetings. If Developer does not receive an allocation of Tax Credits as a result of such second application, the Parties agree to meet and confer in good faith 20-53
ARTICLE VI.
38 for a period of 90 days to determine if a feasible and mutually acceptable alternate arrangement can be made to finance development and construction of the Project, or if there are changes that could be made to the application to enhance the likelihood of an award of 4% Tax Credits for the Project. The Parties understand and agree that the Housing Authority may enter into separate disposition and development agreements for affordable housing projects which may impact the tax credit financing. Accordingly, Developer agrees to coordinate its application for such funding with the Housing Authority and other housing developers identified by the Housing Authority, to allow for the most competitive financing of all three (3) projects. Following such meet and confer period, unless the parties have agreed to an alternative arrangement to finance the Project, Developer agrees to use commercially reasonably efforts to submit an application for an allocation of 4% Tax Credits for the next successive round of TCAC’s allocation meetings. If Developer does not receive an allocation Tax Credits as a result of such third application, Developer agrees to use commercially reasonably efforts to submit an application for an allocation of 4% Tax Credits in the next two consecutive rounds of TCAC’s allocation meetings. If Developer does not receive an allocation of Tax Credits as a result of all five rounds of applications, the Parties agree to meet and confer in good faith for a period of 90 days to determine if a feasible and mutually acceptable alternate arrangement can be made to finance development and construction of the Project. If no agreement is reached by the Parties within such 90-day period regarding the alternative courses of action described in the preceding sentence, this Agreement may be terminated upon 15 days’ written notice by one Party to the other Party. Any agreement that is reached between the Parties on an alternative financing plan for the Project must be memorialized in an implementation agreement to this Agreement, which is subject to approval and execution by Housing Authority’s Executive Director. Except if such failure is a result of an Unavoidable Delay, if Developer fails to make the required applications to TCAC, then the Housing Authority or the Developer may terminate this Agreement upon 15 days’ written notice to the other Party. Failure of Developer to receive an award of 4% Tax Credits will not constitute an Event of Default under the terms of this Agreement, unless due to the intentional misconduct of Developer.
VI.1.2 P
ermanent Loan . Prior to the Close of Escrow, Developer shall obtain for the Housing Authority’s review and approval, which may be withheld or conditioned in Housing Authority’s reasonable discretion and which shall not be unreasonably delayed, a conditional forward loan commitment for each Permanent Loan.
VI.2 Project Budget.
The Developer shall provide the Housing Authority a Project Budget prior to submittal of Project Entitlements, subject to the Housing Authority’s reasonable approval, which shall be prepared based on the best, good faith estimate of Developer of the costs which are likely to be incurred for the Project, and the Parties recognize that events and circumstances not currently contemplated, some of which are outside of the control of the Developer, could result in changes in the Project Costs, necessitating changes in the Project Budget. By way of illustration, the Parties recognize that Project Costs will change at such time as the Developer is able to solicit bids from contractors and subcontractors based on actual, approved Plans and Specifications for construction of the Project. Project Costs may also change given the availability or lack of availability of construction materials, cost increases for labor or materials, or change in fees and interest rates, 20-54
39 none of which may be final until close to the time of the Close of Escrow. To the extent that Developer is required to make any material changes to the Project Budget, Developer must promptly submit a revised Project Budget to the Housing Authority Executive Director for review and approval, which review and approval shall not be unreasonably withheld, conditioned or delayed, as to the sufficiency of the financing secured by Developer to meet the revised Project Costs. A material change is a change or cumulative changes that causes the total Project Costs, or any line item in the Project Budget with a cost exceeding $50,000, to increase or decrease by more than 10% from what is shown in the Project Budget.
VI.3 O
nly Permitted Exceptions. Developer shall not record and shall not allow to be recorded against the Property any Security Instrument, lien or other encumbrance that is not a Permitted Exception. Developer shall remove or cause to be removed, any non-Permitted Exception made or recorded against the Property or must assure the complete satisfaction of any such non-Permitted Exception to the satisfaction of the Housing Authority, in the Housing Authority’s sole and absolute discretion, or provide other security acceptable to the Housing Authority, or a statutory bond resulting in removal of such lien. The covenants of Developer set forth in this Section regarding recordation of encumbrances on the Property shall run with title to the Property and bind successive owners of the Property until recordation (or deemed issuance) of the Certificate of Completion for the Project.
VI.4 Housing Authority
Right to Discharge Prohibited Encumbrances. After 60
calendar days’ notice to Developer of a non-Permitted Exception and provided that Developer has not caused such non-Permitted Exception to be removed, insured, indemnified against or bonded against pursuant to Section 6.4, the Housing Authority will have the right, but not the obligation, to satisfy or remove any non-Permitted Exception against the Property or the Project and receive reimbursement from Developer for any reasonable amounts paid or incurred in satisfying or removing any such non-Permitted Exception, upon demand. Any reasonable amount expended by the Housing Authority to discharge a non-Permitted Exception that is not reimbursed to the Housing Authority by Developer within 30 calendar days following written demand for payment from the Housing Authority will accrue interest at an annual rate equal to the lesser of 8% per annum or the maximum rate of interest allowed by law under the circumstances, until paid in full. Nothing in this Section VI.4, t hough, will require Developer to
pay or make provisions for the payment of any tax, assessment, lien or charge of which Developer is in the process of contesting the validity or amount, in good faith, and so long as such contest will not subject all or any portion of the Property to forfeiture or sale.
VI.5 R
ights of Lender and Housing Authority Regarding Permitted Security Instruments; Notice of Liens. The Developer will promptly notify the Housing Authority of any Security Instrument or lien asserted against or attached to all or any portion of the Project or the Property, other than as listed in Section 3.7, prior to the date of issuance of a Certificate of Completion for the Project, whether by voluntary act of Developer or otherwise; provided, however, that no notice of filing of preliminary notices or mechanic’s liens need be given by Developer to the Housing Authority, prior to suit being filed to foreclose any such mechanic’s lien.
VI.5.0 Notice of Default to Lenders . Wh
enever the Housing Authority delivers
any notice of default to Developer under this Agreement, the Housing Authority must send a copy 20-55
40 of such notice of default to the Tax Credit Investor and to each Lender holding a Permitted Security Instrument of which the Housing Authority has received notice and a contact address for transmittal of such notices. The Tax Credit Investor and each such Lender will have the right, at its option, to commence the cure or remedy of any default of Developer set forth in such notice and to diligently and continuously proceed with such cure or remedy such default, within the cure period allowed to Developer under this Agreement, plus an additional 60 days. The Housing Authority will accept performance by the Tax Credit Investor or a Lender with the same force and effect as if furnished by Developer. If such default can only be remedied or cured by the Tax Credit Investor replacing the general partner of the limited partnership or by the Lender upon obtaining possession of the Property, the Housing Authority must allow such party to remedy or cure such default within 90 days after obtaining possession of the Property or after the general partner is replaced, as applicable. If the default reasonably requires more than 90 days to cure, however, then the time available to the Tax Credit Investor or Lender to cure pursuant to this Section VI.5 will be the reasonable time required to complete such cure, as long as such party has commenced the cure of the default within such 90-day period and diligently pursues the cure to completion. During such extension of time, the Housing Authority shall not terminate this Agreement or exercise other remedies under this Agreement by reason of such default. All Developer specific defaults shall be deemed cured upon Transfer of Developer’s interest in the entire Property to the Tax Credit Investor or Lender, its assignee or nominee, pursuant to exercise of remedies by such party . In addition, any Tax Credit Investor or Lender properly completing the Project with the consent of the Housing Authority (pursuant to the process set forth below in this Section 6.6) shall be entitled, upon written request made to the Housing Authority, to a Certificate of Completion from the Housing Authority. Nothing contained in this Agreement will be deemed to permit, authorize or require any Lender or Tax Credit Investor to undertake or continue the construction or installation of any portion of the Project (beyond the extent necessary to conserve or protect improvements or construction already made) prior to or after acquiring title to or possession of the entire Property or the Project , without expressly assuming Developer’s obligations under this Agreement by written agreement reasonably satisfactory to the Housing Authority, in which such party agrees to complete the Project in the manner provided in this Agreement, subject to time extensions as reasonably required by such party. Any such party desiring to complete the Project must provide the Housing Authority with evidence reasonably satisfactory to the Housing Authority that such party has the qualifications (or will engage one or more licensed contractor(s) or consultant(s) with such qualifications) and financial capability necessary to perform such obligations.
VI.5.1 N
o Termination of Permitted Security Instruments by Default . An Event of Default by Developer under this Agreement shall not defeat or render invalid the lien of any Permitted Security Instrument made in good faith and for value as to all or any part of the Property, whether or not the Lender is subordinated to this Agreement; but unless otherwise provided in this Agreement, this Agreement shall be binding and effective against any owner of the Property whose title thereto is acquired pursuant to exercise of remedies under a Permitted Security Instrument or from a person or entity exercising any such remedies.
VI.5.2 Lender Rights on Termination or Modification . N o termination of this
Agreement will be binding upon a Lender unless the termination occurs after notice to such Lender and such Lender’s failure to cure all then existing defaults under this Agreement (except any Developer specific defaults ) pursuant to this Section VI.5 , or with such Lender’s prior written
20-56
41 consent. No modification of this Agreement that materially affects the rights of a Lender will be binding upon the Lender without its prior written consent.
VI.5.3 No Construction Obligation of Lender. No L ender or Tax Credit Investor will be obligated by the provisions of this Agreement to construct or complete the development of the Project or to guarantee such construction or completion, but may do so pursuant to and in accordance with this Section 6.6. Nothing in this Agreement will be deemed to construe, permit, or authorize any person or entity to devote all or any portion of the Property to any uses, or to construct any improvements thereon, other than those uses or the Project provided for or authorized by this Agreement.
VI.5.4 Housing Authority Rig
ht to Cure Obligations . In the event of a default
by Developer under any Permitted Security Instrument prior to the date of issuance of a Certificate of Completion for the Project where the Lender has not exercised its option to complete the Project under Section VI.5.0, the Housing Authority ma
y cure the default of Developer under the
applicable Permitted Security Instrument, but is under no obligation to do so, prior to completion of any sale or foreclosure of all or any portion of the Property under the applicable Permitted Security Instrument. The Housing Authority shall be entitled to reimbursement from Developer of all costs and reasonable expenses incurred by the Housing Authority in curing any default of Developer under any Permitted Security Instrument, under demand. Any amount expended by the Housing Authority to cure a default of Developer under any Permitted Security Instrument that is not reimbursed to the Housing Authority by Developer within 30 calendar days after such notice to Developer, shall accrue interest at an annual rate equal to the lesser of 8 % per annum or the maximum rate of interest allowed by law under the circumstances until paid in full.
VI.5.5 Foreclosure of Permitted Security Instrument .
Foreclosure of any
Permitted Security Instr ument, whether by judicial proceedings or by power of sale, or any conveyance by deed in lieu of foreclosure, shall not require the consent of the Housing Authority or constitute a default under this Agreement.
DEFAULTS, REMEDIES AND TERMINATION
VII.1 Defaults - General. Subject to any extensions of time provided for in this Agreement, failure or delay by a Party to perform any term or provision of this Agreement shall constitute an “Event of Default” under this Agreement; provided, however, that if a Party otherwise in default commences to cure, correct or remedy such default within 30 calendar days after receipt of written notice from the injured Party specifying such default and shall diligently and continuously prosecute such cure, correction or remedy to completion (and where any time limits for the completion of such cure, correction or remedy are specifically set forth in this Agreement, then within said time limits), such Party shall not be deemed to be in default under this Agreement and no Event of Default shall be deemed to have occurred; provided, however, that if the default reasonably requires more than 30 days to cure, then the time available to the Party otherwise in default to cure pursuant to this Section 7.1 shall be the reasonable time 20-57
ARTICLE VII.
42 required to complete such cure, as long as the Party otherwise in default has commenced the cure of the default within such 30-day period and diligently pursues the cure to completion.
VII.1.2 The injured Party shall give written notice of default to the Party in default, specifying the default complained of by the non-defaulting Party. Failure or delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default.
Delays by any Party in asserting any of its rights and/or remedies will not deprive that Party of its right to institute and maintain any actions or proceedings that it may reasonably deem necessary to protect, assert or enforce any such rights or remedies.
VII.1.3 In addition to other acts or omissions of the Developer that may legally or equitably constitute a default or breach of this Agreement, the occurrence of any of the following specific events prior to the issuance of a Certificate of Completion for the Project, shall constitute an “Event of Default” under this Agreement and shall not be subject to the notice and cure provisions of Section VII.1.1:
VII.1.3.1 Any material default by the Developer under any Permitted Security Instrument for any purpose or reason that remains uncured following expiration of any applicable cure period under such Permitted Security Instrument.
VII.1.3.2 Any representation, warranty or disclosure made to the Housing Authority by the Developer regarding this Agreement or the Project is materially false.
VII.1.3.3 There occurs any event of dissolution, reorganization or termination of the Developer that adversely and materially affects the operation or value of the Property or the Project, and such event is not corrected within 5 business days following written notice of such event from the Housing Authority to the Developer.
VII.1.3.4 The Developer Transfers its interest in this
Agreement, the Property, or the Project, or any portion thereof, whether voluntarily or involuntarily or by operation of law, in violation of the terms and conditions of this Agreement and such action is not cured within the period prescribed in Section VIII.2.2.
VII.1.3.5 The Developer becomes insolvent or a receiver is appointed to conduct the affairs of the Developer under state or federal law.
VII.1.3.6 The Developer’s legal entity status or right to transact business in California is suspended or terminated and such event is not corrected within 5 business days following written notice of such event from the Housing Authority to Developer.
VII.2 D
EVELOPER’S ELECTION RE: SPECIFIC ENFORCEMENT OF
AGREEMENT OR WAIVER OF RIGHT TO SPECIFIC PERFORMANCE AND LIMITATION ON RECOVERY OF DAMAGES PRIOR TO CLOSE OF ESCROW.
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT PERTAINING TO THE
CONVEYANCE OF THE PROPERTY BY THE HOUSING AUTHORITY UNDER THIS
AGREEMENT PRIOR TO CLOSE OF ESCROW, THE DEVELOPER SHALL, AS ITS SOLE 20-58
43 AND EXCLUSIVE REMEDY, HAVE THE RIGHT TO EXERCISE ONE OF THE ALTERNATIVE REMEDIES DESCRIBED IN SECTIONS VII.2.1 AND VII.2.2. THE DEVELOPER’S ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
VII.2.1 W AIVER OF RIGHT TO SPECIFIC PERFORMANCE AND
LIMITATION ON RECOVERY OF DAMAGES . THE DEVELOPER MAY WAIVE THE REMEDY SET FORTH IN SECTION VII.2.2 AND MAY CANCEL THE ESCROW PURSUANT TO SECTION III.10. UPON CANCELLATION OF THE ESCROW, THE
DEVELOPER SHALL BE RELIEVED OF ANY OBLIGATION UNDER THIS AGREEMENT
TO PURCHASE OR ACCEPT TITLE TO THE PROPERTY AND ANY SUCH ESCROW
CANCELLATION SHALL BE WITHOUT ANY LIABILITY OF THE DEVELOPER TO THE HOUSING AUTHORITY OR ANY OTHER PERSON ARISING FROM SUCH ACTIONS.
THE DEVELOPER SHALL BE LIMITED TO RECOVERING ANY AMOUNTS ACTUALLY
EXPENDED BY THE DEVELOPER IN REASONABLE RELIANCE ON THIS AGREEMENT
PRIOR TO THE DATE OF THE OCCURRENCE OF THE EVENT OF DEFAULT BY THE HOUSING AUTHORITY, NOT TO EXCEED $1,000. THE DEVELOPER WA IVES ANY
RIGHT TO RECOVER ANY OTHER SUMS FROM THE HOUSING AUTHORITY ARISING
FROM AN EVENT OF DEFAULT BY THE HOUSING AUTHORITY PRIOR TO THE CLOSE OF ESCROW. THE DEVELOPER ACKNOWLEDGES THE PROTECTIONS OF CIVIL CODE SECTION 1542 RELATIVE TO THE WAIVER AND RELEASE CONTAINED IN THIS SECTION VII.2.1, WHICH CIVIL CODE SECTION READS AS FOLLOWS:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR OR RELEASING PARTY DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT
THE TIME OF EXECUTING THE RELEASE AND THAT , IF
KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR
OR RELEASED PARTY.”
BY INITIALING BELOW, THE DEVELOPER KNOWINGLY AND VOLUNTARILY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE WAIVERS AND RELEASES OF THIS SECTION VII.2.1.
DEVELOPER’S INITIALS ____________
IN CONNECTION WITH THE WAIVERS IN THIS SECTION VII.2.1, THE
DEVELOPER FURTHER WAIVES THE RIGHT TO RECORD A NOTICE OF PENDENCY
OF ACTION IN CONNECTION WITH ANY ACTION OR PROCEEDING BY DEVELOPER
TO BE REIMBURSED BY THE HOUSING AUTHORITY AS PROVIDED IN THIS SECTION
7.2.1. VII.2.2
SPECIFIC PERFORMANCE . THE DEVELOPER MAY
WAIVE THE REMEDIES SET FORTH IN SECTION VII.2.1 AND, IN ACCORDANCE WITH CIVIL CODE SECTION 3384, ET SEQ., INSTITUTE AN ACTION AGAINST THE HOUSING
AUTHORITY FOR SPECIFIC PERFORMANCE OF THE TERMS OR PROVISIONS OF THIS 20-59
44 AGREEMENT WHICH WERE TO HAVE BEEN COMPLETED BY THE HOUSING AUTHORITY PRIOR TO THE CLOSE OF ESCROW.
VII.3 RE VERSION TO HOUSING AUTHORITY.
7.3.1 The Developer shall diligently and in good faith pursue completion of the Project and improvements in accordance with this Agreement. Following the close of escrow, if this Agreement is terminated pursuant to this Agreement and such termination occurs prior to issuance of a Certificate of Occupancy for the improvements, the Housing Authority shall have the right to reenter and take possession of the Property and all improvements thereon, and to revest in the Housing Authority the estate of the Developer for such Property. From and after the issuance of a Certificate of Occupancy for the improvements thereon and the recordation of the Notice of Completion, the remedies set forth in this Section shall no longer be available to the Housing Authority under any circumstances.
VII.3.2 Upon revesting in the Housing Authority, the Housing Authority shall promptly use its best efforts to resell the Property . Upon sale, the proceeds shall be applied as follows, to the extend funds are available:
VII.3.2.1 First, to reimburse the Housing Authority for any reasonable costs it incurs in managing or selling the Property , including but not limited to amounts to discharge or prevent liens or encumbrances arising from any acts or omissions of the Developer or its contractors;
7.3.2.2.1. Second, to the Developer up to the sum of the Purchase Price Developer paid for the Property and the reasonable costs actually expended by the Developer in undertaking the entitlement and construction of the portion of the improvements; and
VII.3.2.2 Any balance to the Housing Authority.
VII.3.3 The right of reverter contained in this Section shall be set forth in the Quitclaim Deed.
VII.3.5 Such right to revest the property to the Housing Authority, to the extent provided in this Agreement, shall be subordinate and subject to and be limited by and shall not defeat, render invalid or limit: any approved s ecurity financing interest permitted by this Agreement and under the financing plan and/or Construction Financing; or any rights or interest provided in this Agreement for the protection of the holder of such s ecurity financing interests.
VII.4 OPTION TO REPURCHASE, REENTER AND REPOSSESS.
7.4.1 Following the close of escrow, if this Agreement is terminated pursuant to Section 7.4 and such termination occurs prior to issuance of a Certificate of Occupancy for the i mprovements, the Housing Authority shall have the 20-60
45 additional right at its option to repurchase, reenter and take possession of any portion of the Property then owned by the Developer with all improvements thereon. From and after the issuance of a Certificate of Occupancy for the improvements and the recordation of the Notice of Completion, the remedies set forth in this Section 7.4 shall no longer be available to the Housing Authority under any circumstances. The recordation of the Notice of Completion shall be conclusive evidence that the rights under this Section 7.4 have been terminated.
7.4.2 Such right to repurchase, reenter and repossess, to the extent provided in this Agreement, shall be subordinate and subject to and be limited by and shall not defeat, render invalid or limit (1) any approved security financing interest permitted by this Agreement and under the financing plan; or (2) any rights or interest provided in this Agreement for the protection of the holder of such security financing interests.
VII.5 To exercise its right to repurchase, reenter and take Property owned by the Developer, the Housing Authority shall pay to the Developer in cash an amount equal to:
VII.5.1 The Purchase Price paid to the Housing Authority for the Property; plus
VII.5.2 The reasonable costs actually expended by the Developer in undertaking the entitlement of the Property to construct the Improvements, construction of the portion of the Improvements existing on the Property at the time of the repurchase, reentry and repossession; less
VII.5.3 Any gains or income withdrawn or made by the Developer from the Property or the improvements thereon; less
VII.5.4 The value of any unpaid liens or encumbrances on the Property which the Housing Authority assumes or takes subject to said encumbrances.
VII.6 No Building Permit upon Developer Default. No building permit shall be issued or building permit application accepted for any structure or improvement on the Property after Developer is determined by a court of competent jurisdiction to be in default of any of the material terms and conditions of this Agreement, until such default thereafter is cured by Developer or is waived by Housing Authority. If Housing Authority lawfully terminates this Agreement because of Developer's default, then Housing Authority shall retain any and all benefits, including without limitation any money, improvements, structures, easements or dedications received by Housing Authority pursuant to any term or condition of this Agreement, and/or Project entitlements.
20-61
46 VII.7 Legal Actions.
VII.7.1 Except as otherwise provided in Section 7.2.1, any Party may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy available to that Party under this Agreement or at law or in equity.
Such legal actions must be instituted in the Superior Court of the State of California in and for the County of Riverside , California, in any other appropriate court within the County of Riverside , California.
VII.7.0 The procedural and substantive laws of the State of California shall govern the interpretation and enforcement of this Agreement, without regard to conflicts of laws principles. The Parties acknowledge and agree that this Agreement is entered into, is to be fully performed in and relates to real property located in the City of Rancho Mirage, County of Rancho Mirage, California.
VII.8 R
ights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties set forth in this ARTICLE VII a re non- exclusive and cumulative, and the exercise by any Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party.
VII.9 D
eveloper Indemnification of the Housing Authority. In addition to any other specific indemnification or defense obligations of the Developer set forth in this Agreement, the Developer agrees to indemnify, defend (upon written request by the Housing Authority and with counsel reasonably acceptable to the Housing Authority) and hold harmless the Indemnified Parties, from any and all losses, liabilities, charges, damages, claims, liens, causes of action, awards, judgments, costs and expenses, including, but not limited to reasonable attorney’s fees of counsel retained by the Indemnified Parties, expert fees, costs of staff time, and investigation costs, of whatever kind or nature (“Claims”), that are in any manner directly or indirectly caused, occasioned or contributed to in whole or in part, through any act, omission, fault or negligence, whether active or passive, of the Developer or the Developer’s officers, agents, employees, independent contractors or subcontractors of any tier, relating in any manner to this Agreement, any work to be performed by the Developer related to this Agreement, the Property, or the Project, or any authority or obligation exercised or undertaken by the Developer under this Agreement, except to the extent caused by the active negligence or willful misconduct of any of the Indemnified Parties. Without limiting the generality of the foregoing, the Developer’s obligation to indemnify the Indemnified Parties will include injury or death to any person or persons, damage to any property, regardless of where located, including the property of the Indemnified Parties, any workers’ compensation or prevailing wage determination, claim or suit or any other matter arising from or connected with any goods or materials provided or services or labor performed regarding the Project or the Property on behalf of the Developer by any person or entity. Additionally, Developer shall defend, indemnify and hold harmless Indemnified Parties from and against any and all liabilities, demands, claims, actions or proceedings and costs and expenses incidental thereto (including costs of defense, settlement and reasonable attorneys' fees), which any or all of them may suffer, incur, be responsible for or pay out as a result of or in connection with any challenge to the legality, validity or adequacy of any of the following: (i) any prior agreements by and between Housing Authority and Developer; (ii) this Agreement and 20-62
47 the concurrent and subsequent permits, licenses and entitlements approved by Housing Authority or City; (iii) any proceedings or other actions undertaken by Housing Authority in connection with the adoption or approval of any of the above. In the event of any administrative, legal, equitable action or other proceeding instituted by any third party (including without limitation a governmental entity or official) challenging the legality, validity or adequacy of any of the above items, any portion thereof, and/or any provision of this Agreement, the Parties shall mutually cooperate with each other in defense of said action or proceeding.
GENERAL PROVISIONS.
VIII.1 Incorporation of Recitals. The Recitals set forth preceding this Agreement are true and correct and are incorporated into this Agreement in their entirety by this reference.
VIII.2 Restrictions on Transfers. The Developer acknowledges that the qualifications and identity of the Developer are of particular importance to the Housing Authority, that the Housing Authority has relied and is relying on the specific qualifications and identity of the Developer in entering into this Agreement with the Developer and, as a consequence, Transfers are permitted only as expressly provided in this Agreement. The Developer must promptly notify the Housing Authority in writing of any and all changes whatsoever in the identity of the business entities or individuals either comprising or in Control of the Developer, as well as any and all changes in the interest or the degree of Control of the Developer by any such person, of which information the Developer or any of its partners, members or officers are notified or may otherwise have knowledge or information.
VIII.2.2 Exc
ept as expressly permitted in this Agreement, the Developer represents to the Housing Authority that it has not made and agrees that it will not make or create, or suffer to be made or created, any Transfer other than a Permitted Transfer, either voluntarily, involuntarily or by operation of law, until after the recordation of a Certificate of Completion for the Project ; provided, however, that the Housing Authority may approve in its reasonable discretion Transfers other than Permitted Transfers prior t o the recordation of a Certificate of Completion. In deciding whether to approve or disapprove any proposed Transfer, the Housing Authority may consider the proposed transferee’s financial strength and the experience of its senior management in undertaking and successfully completing projects of a similar type and size as the Project. Any Transfer made in contravention of this Section VIII.2 will be voidable at the election of the Housing Authority which may, at its option, terminate this Agreement. In such event, the Housing Authority may exercise any other remedy available to the Housing Authority under the terms of this Agreement, provided, however, that (i) the Housing Authority must first notify the Developer in writing of its intention to terminate this Agreement or to exercise any other remedy, and (ii) the Developer will have 20 calendar days following its receipt of such written notice to commence and, thereafter, diligently and continuously proceed to cure such default and submit evidence of the initiation and satisfactory completion of such cure to the Housing Authority, in a form and substance reasonably satisfactory to the Housing Authority.
VIII.2.3 The Developer will provide the Housing Authority with not less than 30 days prior written notice of any proposed Permitted Transfer which the Developer desires to 20-63
ARTICLE VIII.
48 enter into prior to the recordation of a Certificate of Completion for the Project subject to the Transfer, other than a Permitted Transfer for which Housing Authority approval is required, in which case Developer must give not less than 5 days prior written notice. For Transfers requiring Housing Authority approval, the Developer will have the burden of demonstrating to the Housing Authority’s reasonable satisfaction that the proposed Permitted Transfer meets the conditions and requirements of this Agreement with respect to Permitted Transfers.
VIII.2.4 Anything in this Agreement to the contrary notwithstanding, the restrictions and prohibitions on Transfers contained in this Section VIII.2 shall terminate upon issuance of a Certificate of Completion for the Project.
VIII.3 N
otices, Demands and Communications Between the Parties. Any and all notices, demands or communications submitted by any Party to another Party pursuant to or as required by this Agreement will be proper if in writing and delivered (i) personally, (ii) by a nationally recognized overnight courier service that provides a receipt with the time and date of delivery, (iii) by registered or certified United States Mail, postage prepaid, return receipt requested, to the principal office of the Housing Authority or the Developer, as applicable, as designated below, or (iv) as a PDF or similar attachment to an email, provided that such email attachment will be followed by mailing that same day a copy thereof ordinary U.S. mail, postage prepaid. Such written notices, demands or communications may be sent in the same manner to such other addresses as either Party may from time to time designate. Any such notice, demand or communication will be deemed to be received by the addressee, regardless of whether or when any return receipt is received by the sender or the date set forth on such return receipt: (a) on the day that it is delivered by personal delivery, (b) on the date of delivery by a nationally recognized overnight courier service or via electronic mail, whether accepted or refused, provided that if any notice or any other communication to be delivered by email attachment as provided herein cannot be transmitted because of a problem affecting the receiving party’s computer, the deadline for receiving such notice or other communication will be extended through the next business day, (c) as shown by the addressee’s return receipt if by certified mail, and as confirmed by the courier service if by courier, or (d) 3 calendar days after it is placed in the United States Mail; provided, however, that if actual delivery occurs after 5:00 p.m., local time where received, or on a non-business day, then such notice or communication so made will be deemed effective on the first business day after the day of actual delivery. Attorneys for any Party will be entitled to provide any notice that a Party desires to provide or is required to provide hereunder.
VIII.3.2 T
he following are the authorized addresses for the submission of notices, demands or communications to the Parties, unless and until changed by a Party upon written notice to the other Party:
20-64
49 TO DEVELOPER: BLIEU LLC
Attn: Mark Bigley
2000 E. Fourth Street, Suite 205
Santa Ana, CA 92705
(T) (714) 323-4006
[email protected]
WITH A COPY TO:
(but such copy will not
constitute notice to
Developer)
Sabelhaus & Strain, LLP
Attn: Stephen A. Strain
1724 10th Street, Suite 110
Sacramento, CA 95811
TO HOUSING
AUTHORITY:
COPY TO:
(but such copy will not
constitute notice to
City)
Housing Authority
69825 CA-111
Rancho Mirage, California 92270
Attention: Isaiah Hagerman, Executive Director
(T) (760) 324-4511
Email: [email protected]
Quintanilla & Associates
777 E. Tahquitz Canyon Way, Suite 200-41
Palm Springs, CA 92262
Attention: Colin Kirkpatrick
(T) 760-993-3702
Email: [email protected]
VIII.4 Conflict of Interest. No member, official or employee of the Housing Authority who has any conflict of interest, direct or indirect, related to this Agreement, the Property, or the development or operation of the Project, will participate in any decision relating to this Agreement. The Parties represent and warrant that they do not have knowledge of any such conflict of interest.
VIII.5 Warranty Against Payment of Consideration for Agreement. The Developer represents and warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration to obtain this Agreement. For the purposes of this Section VIII.5, th
ird parties will not include persons to whom fees are paid for professional services, if rendered by attorneys, financial consultants, accountants, engineers, architects and the like when such fees are considered necessary by the Developer.
VIII.6 No
n -liability of Housing Authority, Officials and Employees. No member, official or employee of the Housing Authority will be personally liable to the Developer, or any successor in interest of the Developer, in the event of any default or breach by the Housing Authority under this Agreement or for any amount that may become due to the Developer or to 20-65
50 its successor, or on any obligations under the terms of this Agreement, except as may arise from the gross negligence or willful acts of such member, official or employee.
VIII.7 U navoidable Delay; Extension of Time of Performance. Subject to specific provisions of this Agreement, performance by any Party under this Agreement will not be deemed, or considered to be, in default where any such default is due to an Unavoidable Delay that is not attributable to the fault of the Party claiming an extension of time to perform. An extension of time for any Unavoidable Delay will be for the period of the Unavoidable Delay and will commence to run from the date of occurrence of the Unavoidable Delay, if the Party asserting the existence of the Unavoidable Delay provides the other Party with written notice of the occurrence of the Unavoidable Delay within 30 days of the commencement of such asserted Unavoidable Delay. Otherwise, the extension of time for an Unavoidable Delay will commence on the date of receipt of written notice of the occurrence of the Unavoidable Delay by the Party not requesting an extension of time to perform due to such Unavoidable Delay.
VIII.7.0 Th
e Parties expressly acknowledge and agree that changes in either general economic conditions or changes in the economic assumptions of either of them that may have provided a basis for entering into this Agreement and that occur at any time after the execution of this Agreement do not constitute an Unavoidable Delay and will not provide any Party with grounds for asserting the existence of an Unavoidable Delay in the performance of any covenant or undertaking arising under this Agreement. Each Party expressly assumes the risk that changes in general economic conditions or changes in such economic assumptions relating to the terms and covenants of this Agreement could impose an inconvenience or hardship on the continued performance of such Party under this Agreement.
VIII.8 I
nspection of Books and Records. The Housing Authority will have the right at all reasonable times, at the Housing Authority’s cost and expense, to inspect the books and records of the Developer pertaining to the Property and/or the Project. The Developer will also have the right at all reasonable times, at the Developer’s sole cost and expense, to inspect the public books and public records of the Housing Authority pertaining to the Property and/or the Project, to the extent relevant to the Developer’s obligations under this Agreement. Nothing in this Section VIII.8
or elsewhere in this Agreement will, however, constitute a waiver or modification of any right or privilege which any Party may have with respect to any document, statement, or other record, including, without limitation, the attorney-client privilege, the attorney work-product privilege, any privilege arising under any state or federal evidentiary code or rule, or any privilege or exclusionary right arising under any state or federal freedom of information or public records disclosure law.
VIII.9 R
eal Estate Commissions. The Housing Authority will not be liable for any real estate commissions, brokerage fees or finder fees that may arise from or be related to this Agreement. The Developer must pay any fees or commissions or other expenses related to 20-66
51 retention or employment of any real estate brokers, agents or other professionals which Developer has retained or engaged.
VIII.10 B inding on Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors, and assigns.
VIII.11 En
tire Agreement. This Agreement and the attached exhibits constitute the entire understanding and agreement of the parties with respect to the matters set forth in this Agreement.
VIII.11.2 T
his Agreement integrates all of the terms and conditions mentioned in this Agreement or incidental to this Agreement, and supersedes all negotiations or previous agreements between the Parties with respect to the Property, the Project, and the other subje cts addressed in this Agreement.
VIII.11.3 None of the terms, covenants, agreements or conditions set forth in this Agreement will be deemed to be merged with any deed conveying title to the Property and this Agreement will continue in full force and effect before and after such conveyance.
VIII.11.4 All waivers of the provisions of this Agreement and all amendments to this Agreement must be in writing and signed by the authorized representative(s) of all Parties.
VIII.12 E
xecution of this Agreement. Following execution this Agreement by the authorized representative(s) of the Developer and prompt delivery of such originals to the Housing Authority, accompanied by an executed Form of Official Action of Developer.
VIII.13 Su
rvival of Indemnity Obligations. All general and specific indemnity and defense obligations of the Parties set forth in this Agreement will survive the expiration or termination of this Agreement, the execution or recordation of the Quitclaim Deed, and/or the issuance and recordation of any Certificate of Completion.
VIII.14 Ti
me Declared to be of the Essence. As to the performance of any obligation hereunder as to which time is a component, the time for the performance of such obligation will be of the essence.
VIII.15 Ap
provals. Except as otherwise provided in this Agreement, approvals required of the Housing Authority or the Developer, or any officers, agents or employees of the Housing Authority or the Developer, will not be unreasonably withheld and approval or disapproval must be given within the time set forth in this Agreement or, if no time is given, within a reasonable time.
VIII.16 Fu
rther Assurances. The Parties agree to reasonably consider such additional actions or the execution of such other documents as may be reasonably necessary or convenient for the financing, development, and operation of the Project, although nothing in this 20-67
52 Section 8.16 shall be deemed a representation, guaranty or commitment by any Party to take any action or execute any document.
VIII.17 H ousing Authority Approvals and Actions. The Housing Authority Executive Director shall have the authority on behalf of the Housing Authority (to the extent not provided otherwise in this Agreement) to make approvals, issue interpretations, waive provisions, grant extensions of time, approve amendments or other modifications to this Agreement, changes to the attached exhibits prior to their execution, and execute documents, including, without limitation, the Notice of Completion, confirmations of subordination, and any documents necessary to implement any changes in the number or affordability of the Qualifying Units, as may be required by TCAC or by a Lender of a Senior Loan or Subordinate Loan, so long as such actions do not reduce the length of affordability of the Qualifying Units or add to the costs incurred or to be incurred by the Housing Authority as specified herein. The Housing Authority Executive Director reserves the right, in his or her sole and absolute discretion, to submit any requested modification, interpretation, amendment or waiver to the Housing Authority Board if the Housing Authority Executive Director reasonably determines or believes that such action is in the best interest of the Housing Authority.
VIII.18 In
vestor Limited Partner Provisions. If and when the Developer is in the form of a limited partnership and admits a Tax Credit Investor into Developer’s partnership, the Housing Authority agrees to the following provisions for the benefit of the Tax Credit Investor:
VIII.18.1 T
he Housing Authority will give the Tax Credit Investor a copy of any notice (at the address provided in a notice by Tax Credit Investor to the Housing Authority) that the Housing Authority gives to the Developer under this Agreement and the Regulatory Agreement, provided that Tax Credit Investor has provided its address and contact information in writing to the Housing Authority;
VIII.18.2 The Housing Authority will give the Tax Credit Investor 30 days after receipt by the Tax Credit Investor of such notice to cure a non-payment of any sum due under the Land Loan and/or the Project Loan;
VIII.18.3 The Housing Authority will give the Tax Credit Investor 60 days after receipt by the Tax Credit Investor of such notice to cure any other default under this Agreement, the Regulatory Agreement and other Land Loan and Project Loan documents; VIII.18.4 If a non-monetary default is incapable of being cured within 60 days, the Housing Authority will give the Tax Credit Investor an additional 90 days to cure such default provided the Tax Credit Investor has commenced to cure such default and is diligently proceeding to cure such default through the end of such period;
VIII.18.5 If the Tax Credit Investor makes any such payment or otherwise cures such default, the Housing Authority will accept such action as curing such default with the same force and effect as if such payment or cure were made by the Developer; VIII.18.6 The Housing Authority will permit the Tax Credit Investor to transfer its interest to any person or entity at any time provided that, if at the time of such transfer 20-68
53 the Tax Credit Investor has not made 100% of the capital contributions the Tax Credit Investor is required to make to the limited partnership, the Tax Credit Investor shall remain liable to the limited partnership for such capital contributions;
VIII.18.7 The Housing Authority will permit the Tax Credit Investor to remove the general partner of the partnership in accordance with the limited partnership agreement, provided that the substitute general partner is reasonably acceptable to the Housing Authority; and
VIII.18.8 The Housing Authority will permit insurance and condemnation proceeds to be used to rebuild the Project provided that (i) if reasonably required, sufficient funds are provided from other sources to effectively rebuild the Project to a lawful affordable housing multi-family complex, and (ii) subject to the rights of any Lenders of Senior Loans, the Housing Authority will hold all such proceeds and disburse them based on the progress of construction, subject to such additional reasonable conditions as the Housing Authority may impose.
8.19 C
ovenants Run with the Land. All of the terms, provisions, and obligations contained in this Agreement shall be binding upon Developer and its heirs, successors, and assigns, and all other persons or entities acquiring all or any portion of the Property and/or Project, or any interest therein, whether by operation of law or in any manner whatsoever, and the rights thereof shall inure to the benefit of Housing Authority and its successors and assigns. As such, all of the provisions of this Agreement shall be enforceable as equitable servitudes and constitute covenants running with the land pursuant to applicable law, including but not limited to, Section 1468 of the California Civil Code. Notwithstanding the above, every person who now or hereafter owns or acquires any right, title or interest in or to any portion of the Property and/or Project shall be deemed to have consented and agreed to every provision contained in this Agreement, whether or not any reference to this Agreement is contained in the instrument by which such person acquired an interest in the Property and/or Project.
8.20 Nexus/Reasonable Relationship Challenges. D
eveloper consents to, and waives
any rights it may have now or in the future to challenge the legal validity of, the conditions or requirements set forth in this Agreement including, without limitation, any claim that they constitute an abuse of the police power, violate substantive due process, deny equal protection of the laws, effect a taking of property without payment of just compensation, or impose an unlawful tax.
8.21 Ambiguities or Uncertainties. The parties hereto have mutually negotiated the terms and conditions of this Agreement and each party received independent legal advice from its attorneys with respect to the advisability of executing this Agreement and the meaning of the provisions contained herein. As such, this Agreement is a product of the joint drafting efforts of both parties and neither party shall be deemed to have solely or independently prepared or framed this Agreement. Therefore, any ambiguities or uncertainties are not to be construed against or in favor of either party.
[
Signatures on Following Pages]
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S-1
SIGNATURE PAGE
TO
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT
HOUSING AUTHORITY:
Rancho Mirage Housing Authority
a California public body
Dated:_________________, 2023 By:
Housing Authority Executive Director
ATTEST:
____________________________
Secretary
APPROVED AS TO LEGAL FORM:
By: _______________________
Colin D. Kirkpatrick, General Counsel
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S-2
SIGNATURE PAGE
TO
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT
DEVELOPER:
Blieu LLC,
a California limited liability company
By: ________________________________
Mark Bigley, Vice President
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EXHIBIT A
A-1
EXHIBIT A
TO
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT
Legal Description of the Property
The land referred to herein is situated in the State of California, County of Riverside, City of RANCHO MIRAGE, described as follows:
THAT PORTION OF THE SOUTH 439.50 FEET OF THE NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 2, TOWNSHIP 5 SOUTH, RANGE 5
EAST, SAN BERNARDINO BASE AND MERIDIAN, IN THE CITY OF RANCHO
MIRAGE, ACCORDING TO THE OFFICIAL PLAT THEREOF, LYING WESTERLY OF
THE WEST LINE OF THE COACH ELLA VALLEY COUNTY WATER DISTRICT
STORM WATER CHANNEL AS CONDEMNED TO SAID DISTRICT BY FINAL
ORDER OF CONDEMNATION, CERTIFIED COPY OF WHICH WAS RECORDED JULY 19, 1963 AS INSTRUMENT NO. 75543 OF OFFICIAL RECORDS. 20-72
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EXHIBIT B
B-1
EXHIBIT B
TO
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT
Scope of Development
Developer intends to develop up to 120 family affordable housing units, consisting of a mix of affordable units, including very low-, low- and moderate- income affordable housing units (with priority provided to a specified number units as determined by the Housing Authority to income- eligible families with a Military Veteran as head of household with the associated parking and site improvements. The proposed project will be located on the approximate 12.34-acre vacant site in the City of Rancho Mirage, and shall include all required or associated improvements, including but not limited to on-site and off-site improvements, all hardscape and all landscaping.
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EXHIBIT
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EXHIBIT C
TO
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT
Schedule of Performance
Certificate of Completion must be issued for the Project, as more particularly provided in the Schedule of Performance. The Project Completion Date shall be no later than the earlier of the following (1) 36 months after both of the following: the Close of Escrow and the Project Commencement Date; or (2) February 2028.
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EXHIBIT
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EXHIBIT D
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EXHIBIT D
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT
Form of Quitclaim Deed
[Attached Behind This Page]
[ALL SIGNATURES MUST BE NOTARY ACKNOWLEDGED]
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EXHIBIT D
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EXHIBIT E
EXHIBIT E
TO
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT
Form of Notice of Agreement
[Attached Behind This Page]
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EXHIBIT E
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RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Rancho Mirage Housing Authority
69825 CA-111
Rancho Mirage, California 92270
Attn: Housing Authority
Executive Director
Exempt from Recording fee
pursuant to Gov’t Code § 27383
NOTICE OF AGREEMENT
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT
TO ALL INTERESTED PERSONS PLEASE TAKE NOTICE that _____________, a _______ (the “Developer”) and the Housing Authority of Rancho Mirage, a California municipal corporation (the “Housing Authority”) entered into an agreement entitled Affordable Housing Disposition and Development Agreement, dated as of ____________, 203__ (the “Agreement”).
A copy of the Agreement is on file with the Housing Authority and is available for inspection and copying by interested persons as a public record of the Housing Authority at the Housing Authority’s offices located at 69825 CA -111, Rancho Mirage, California 92270, during the Housing Authority’s regular business hours.
The Agreement affects the real property described in Exhibit A a ttached to this Notice of Agreement (the “Property ”). The meaning of defined terms, indicated by initial capitalization, used in this Notice of Agreement shall be the same as the meaning ascribed to such terms in the Agreement.
PLEASE TAKE FURTHER NOTICE that the Agreement contains certain development c
ovenants running with title to the Property and other agreements between the Developer and the Housing Authority affecting the Property, as set forth below (all section references are to the Agreement):
Section 4.1 of the Agreement provides:
4.1 Developer Covenant to Undertake Project. The Developer covenants, for itself, its successors and assigns, to and for the benefit of the Housing Authority, that the Developer will commence and complete the development of the Project on the Property within the time period for such actions set forth in the Schedule of Performance. The Developer covenants and agrees for itself, its successors, and assigns, that the Property will be improved and developed with the Project in substantial conformity with the terms and conditions of this Agreement, the Scope of Development, the Schedule of Performance, any and all plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually 20-79
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agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and conditions of each Governmental Agency with jurisdiction over the Property or the Project. The covenants of this Section IV.1 shall run with the land of the Property until released by recordation of the Certificate of Completion.
Section 5.1 of the Agreement provides:
5.1 Obligation to Refrain from Discrimination . The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Developer, itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub-tenants, sub-lessees or vendees of the Property, except only as may be necessary for Developer to comply with regulatory agreements, covenants and other agreements regulating occupancy of the Project . Subdivision (d) of Section 51 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to this Section 5.1 and to Section 5.2.1 below. The covenant of this Section V.1 shall run with the Property and shall be enforceable against the Developer and its successors and assigns in perpetuity.
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This NOTICE OF AGREEMENT is dated as of _________________, 2023, and has been executed on behalf of the Developer and the Housing Authority by and through the signatures of their authorized representative(s) set forth below. This Notice of Agreement may be executed in counterparts and when fully executed each counterpart shall be deemed to be one original instrument.
HOUSING AUTHORITY:
Rancho Mirage Housing Authority
a California public body
Dated:_________________, 2023 By:
Housing Authority Executive Director
ATTEST:
____________________________
Secretary
APPROVED AS TO LEGAL FORM:
By: _______________________
Colin D. Kirkpatrick, General Counsel
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DEVELOPER:
Blieu LLC
a California limited liability company
By: __________________________________
Name: Mark Bigley
Title: Vice President
[ALL SIGNATURES MUST BE NOTARY ACKNOWLEDGED]
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EXHIBIT E
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STATE OF CALIFORNIA )
)
COUNTY OF __________________ )
On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the wi thin instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
______________________________________
Name: ______________________________
Notary Public
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 20-83
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STATE OF CALIFORNIA )
)
COUNTY OF __________________ )
On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
______________________________________
Name: ______________________________
Notary Public
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 20-84
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EXHIBIT E
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STATE OF CALIFORNIA )
)
COUNTY OF __________________ )
On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the wi thin instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
______________________________________
Name: ______________________________
Notary Public
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 20-85
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EXHIBIT E
E-8
STATE OF CALIFORNIA )
)
COUNTY OF __________________ )
On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the wi thin instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
______________________________________
Name: ______________________________
Notary Public
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 20-86
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EXHIBIT E
E-9
EXHIBIT A
TO
NOTICE OF AGREEMENT
Legal Description of Property
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EXHIBIT F
EXHIBIT F
TO
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT
Form of Official Action of Developer
[Attached Behind This Page]
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EXHIBIT F
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FORM OF OFFICIAL ACTION OF DEVELOPER
The undersigned, duly appointed and serving Vice President of Blieu LLC, a California limited liability company (“Developer”), do hereby certify that Developer will serve as the Developer of Rancho Mirage Crossings under the Agreement described below. No consent or approval of any other person is required for the undersigned to make the certifications set forth in this Certificate.
The Developer further certifies that the following named person(s):
Doug Bigley, President & Chief Executive Officer
John Bigley, Chief Operating Officer
David Bigley, Chief Financial Officer
Grant Bigley, Vice President
Jaclyn Attanese, Vice President
may each act and sign alone on behalf of Developer, to bind Developer, without any additional or further consent of any person, and are each authorized and empowered for and on behalf of and in the name of Developer , each acting and signing alone, to: (1) sign and deliver that certain Affordable Housing Disposition and Development Agreement, dated as of ____________, 2023 (“Agreement”), regarding the development of certain real property located in the City of Racho Mirage, California, and performance of other obligations of the “Developer” as set forth in the Agreement; (2) sign and deliver all other documents on behalf of the respective entity identified set forth above to be signed or executed in connection with the transactions contemplated in the Agreement; and (3) take all actions on behalf of the respective entity identified above that may be considered necessary to conclude the transactions and complete the development contemplated in the Agreement.
The authority conferred and certified to in this Certificate shall be considered retroactive and any and all acts authorized in this Certificate that were performed before the execution of this Certificate are approved and ratified by the entity identified above. The authority conferred and certified to in this Certificate shall continue in full force and effect until the Housing Authority Executive Director of the Housing Authority of Rancho Mirage receives written notice of the revocation of this Certificate.
Developer further certifies that the activities covered by the authorities conferred and certified to in this Certificate and the foregoing certifications constitute duly authorized activities of Developer; that these authorities and certifications are now in full force and effect; and that there is no provision in any document under which Developer is organized and/or that governs such entity’s continued existence or limits the power of the undersigned to confer the authorities or make the certifications set forth in this Certificate, and that the same are in conformity with the provisions of all such documents.
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Dated: ______________, 202__
DEVELOPER:
Blieu LLC,
a California limited liability company
By: ________________________________
Name, Title
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EXHIBIT G
EXHIBIT G
TO
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT
Form of Certificate of Completion
[Attached Behind This Page]
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EXHIBIT G
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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
______________________________
______________________________
_________________________________
Attn: ______________________
______________________________________________________________________________ Exempt from Recording fee
pursuant to Gov’t Code § 27383
THE HOUSING AUTHORITY OF RANCHO MIRAGE
CERTIFICATE OF COMPLETION
I, __________________, Housing Authority Executive Director of the Housing Authority of Rancho Mirage (the “Housing Authority”) certify that:
Section 1. T he Project required to be constructed in accordance with that certain Affordable Housing Disposition and Development Agreement, dated ____________, 202__ (the “Agreement”), between the Housing Authority and Blieu LLC, a California limited liability company (the “Developer”), on that certain real property specifically described in the legal description attached to this Certificate of Completion as Exhibit A (the “Property”), is complete in accordance with the provisions of the Agreement.
This Certificate of Completion constitutes conclusive evidence of the Housing Authority’s de
termination of satisfaction by Developer or its assignee of all obligations under the Agreement to construct and install the Project on the Property, including any and all buildings, parking areas, landscaping areas and related improvements necessary to support or meet any requirements applicable to the Project and its use and occupancy on the Project, whether or not such improvements are located on or off the Property or on other property subject to the Agreement.
Notwithstanding any provision of this Certificate of Completion, the Housing Authority may enforce all provisions of the Agreement and Regulatory Agreement, recorded against the Property by the Developer and the Housing Authority, including but not limited to any covenant of said Agreements surviving this Certificate of Completion in accordance with the terms and conditions of said agreements. The Agreement is an official record of the Housing Authority and a copy of the Agreement may be inspected at the Housing Authority’s office located at 69825 CA -111, Rancho Mirage, CA 92270, during the Housing Authority’s regular business hours.
This Notice of Completion shall not constitute evidence of compliance with, or satisfaction of, any obligation of the Developer to any holder of a Security Financing Interest, including, but not limited to, the holder of a deed of trust securing money loaned to finance the Property, or any part thereof, and shall not be deemed to be either a notice of completion 20-92
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under the California Civil Code or a certificate of occupancy. This Notice of Completion shall not constitute evidence of compliance with the prevailing wage requirements of California Labor Code Sections 1720 et seq , or the requirements set forth in Section 4.6 of the Disposition Agreement.
Capitalized ter ms used in this Notice of Completion which are not defined herein shall have the meanings given such terms in the Disposition Agreement.
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DATED AND ISSUED this _____ day of ______________, 202__.
RANCHO MIRAGE HOUSING AUTHORITY , a
California public body
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
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By: ___________________________
Executive Director
STATE OF CALIFORNIA )
)
COUNTY OF __________________ )
On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
______________________________________
Name: _______________________________
Notary Public
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 20-95
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EXHIBIT A
TO
CERTIFICATE OF COMPLETION
Legal Description of the Property
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EXHIBIT H
EXHIBIT H
TO
REGULATORY AGREEMENT
[Attached Behind This Page]
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RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Rancho Mirage Housing Authority
69825 CA-111
Rancho Mirage, California 92270
Attn: Housing Authority
Executive Director
______________________________________________________________________________ APN SPACE ABOVE FOR RECORDER’S USE ONLY
EXEMPT FROM RECORDING FEE PER
GOVERNMENT CODE §27383
REGULATORY AGREEMENT
by and between
RANCHO MIRAGE HOUSING AUTHORITY,
and
__________________________________________________,
a California limited partnership
[Dated as of _____________, 202__ for reference purposes only] [TO BE INSERTED, SUBJECT TO HOUSING AUTHORITY’S REASONABLE APPROVAL – RESTRICTING THE USE OF THE PROPERTY CONSISTENT WITH THE TERMS OFO THE DISPOSITION AND DEVELOPMENT AGREEMENT]
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EXHIBIT H
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EXHIBIT H
H-2
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EXHIBIT H
ATTACHMENT NO. 1
-1-
ATTACHMENT NO. 1
TO
REGULATORY AGREEMENT
Property Legal Description
[to be inserted]
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1603\01\2595738.2
EXHIBIT L
L-0
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